EWBC
East West Bancorp, Inc.
$123.12
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 10.1% below fair value
You pay
$123.12
Bear
$95.87
Fair
$136.96
Bull
$178.05
Bear
$95.87
-22.1%
ROTCE 11.8% → 1.39x TBV
Fair
$136.96
+11.2%
ROTCE 15.7% → 2.09x TBV
Bull
$178.05
+44.6%
ROTCE 18.1% → 2.51x TBV
Key Value Driver
ROTCE (15.7%) vs. cost of equity (9.6%)
Implied Market Multiple
2.0x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $130.67 from 24 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $136.96 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.
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