FCF
First Commonwealth Financial Corporation
$19.95
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 15.3% below fair value
You pay
$19.95
Bear
$15.11
Fair
$23.56
Bull
$28.63
Bear
$15.11
-24.3%
ROTCE 9.9% → 1.33x TBV
Fair
$23.56
+18.1%
ROTCE 13.2% → 2.08x TBV
Bull
$28.63
+43.5%
ROTCE 15.2% → 2.52x TBV
Adjust Assumptions
13.2%
8.4%
Key Value Driver
ROTCE (13.2%) vs. cost of equity (8.4%)
Implied Market Multiple
1.76x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (18 analysts)
$30.00
Divergence from AlphaVal
21%
Summary
With ROTCE of 13.2% vs. 8.4% cost of equity, fair P/TBV is 2.08x on $11.35 tangible book, implying $23.56 per share. DDM cross-check: $10.84.
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.
Dividend-based valuation: $10.84 (54% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
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