EWBC
East West Bancorp, Inc.
$131.00
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 4.6% below fair value
You pay
$131.00
Bear
$91.25
Fair
$137.29
Bull
$164.92
Bear
$91.25
-30.3%
ROTCE 11.8% → 1.50x TBV
Fair
$137.29
+4.8%
ROTCE 15.7% → 2.26x TBV
Bull
$164.92
+25.9%
ROTCE 18.1% → 2.72x TBV
Key Value Driver
ROTCE (15.7%) vs. cost of equity (9.2%)
Implied Market Multiple
2.13x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $131.67 from 24 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $137.29 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