EBC
Eastern Bankshares, Inc.
$22.24
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Overvalued
Trading 124.6% above fair value
You pay
$22.24
Bear
$6.93
Fair
$9.90
Bull
$12.87
Bear
$6.93
-68.8%
ROTCE 4.0% → 0.30x TBV
Fair
$9.90
-55.5%
ROTCE 2.9% → 0.30x TBV
Bull
$12.87
-42.1%
ROTCE 3.3% → 0.30x TBV
Adjust Assumptions
2.9%
8.0%
Key Value Driver
ROTCE (2.9%) vs. cost of equity (8.0%)
Implied Market Multiple
1.69x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (8 analysts)
$25.60
Divergence from AlphaVal
61%
Summary
With ROTCE of 2.9% vs. 8.0% cost of equity, fair P/TBV is 0.30x on $13.15 tangible book, implying $9.90 per share.
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 (8.0%). This means the bank is worth less than the net assets on its books.
Wall Street's average price target is $25.60 (from 8 analysts). Our estimate is 61% 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