EBC
Eastern Bankshares, Inc.
$21.51
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Overvalued
Trading 117.3% above fair value
You pay
$21.51
Bear
$6.93
Fair
$9.90
Bull
$12.87
Bear
$6.93
-67.8%
ROTCE 4.0% → 0.30x TBV
Fair
$9.90
-54.0%
ROTCE 2.9% → 0.30x TBV
Bull
$12.87
-40.2%
ROTCE 3.3% → 0.30x TBV
Adjust Assumptions
2.9%
8.2%
Key Value Driver
ROTCE (2.9%) vs. cost of equity (8.2%)
Implied Market Multiple
1.62x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (8 analysts)
$26.00
Divergence from AlphaVal
62%
Summary
With ROTCE of 2.9% vs. 8.2% cost of equity, fair P/TBV is 0.30x on $13.30 tangible book, implying $9.90 per share. DDM cross-check: $661.10.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Return on equity (2.9%) is below the minimum investors require (8.2%). This means the bank is worth less than the net assets on its books.
Dividend-based valuation: $661.10 (6578% above our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $26.00 (from 8 analysts). Our estimate is 62% below the consensus -- consider that gap carefully.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly