FBIZ
First Business Financial Services, Inc.
$69.96
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 35.6% below fair value
You pay
$69.96
Bear
$70.57
Fair
$108.59
Bull
$131.39
Bear
$70.57
+0.9%
ROTCE 10.5% → 1.64x TBV
Fair
$108.59
+55.2%
ROTCE 14.0% → 2.53x TBV
Bull
$131.39
+87.8%
ROTCE 16.1% → 3.06x TBV
Adjust Assumptions
14.0%
8.0%
Key Value Driver
ROTCE (14.0%) vs. cost of equity (8.0%)
Implied Market Multiple
1.63x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (10 analysts)
$79.67
Divergence from AlphaVal
36%
Summary
With ROTCE of 14.0% vs. 8.0% cost of equity, fair P/TBV is 2.53x on $43.00 tangible book, implying $108.59 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.
Wall Street's average price target is $79.67 (from 10 analysts). Our estimate is 36% above 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