EWBC
East West Bancorp, Inc.
$125.53
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 9.7% below fair value
You pay
$125.53
Bear
$97.34
Fair
$139.06
Bull
$180.78
Bear
$97.34
-22.5%
ROTCE 11.8% → 1.37x TBV
Fair
$139.06
+10.8%
ROTCE 15.7% → 2.07x TBV
Bull
$180.78
+44.0%
ROTCE 18.1% → 2.48x TBV
Adjust Assumptions
15.7%
9.7%
Key Value Driver
ROTCE (15.7%) vs. cost of equity (9.7%)
Implied Market Multiple
2.04x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (24 analysts)
$145.63
Divergence from AlphaVal
5%
Summary
With ROTCE of 15.7% vs. 9.7% cost of equity, fair P/TBV is 2.07x on $61.56 tangible book, implying $139.06 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