FIBK
First Interstate BancSystem, Inc.
$37.27
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 25.6% below fair value
You pay
$37.27
Bear
$32.13
Fair
$50.13
Bull
$60.92
Bear
$32.13
-13.8%
ROTCE 9.9% → 1.36x TBV
Fair
$50.13
+34.5%
ROTCE 13.2% → 2.12x TBV
Bull
$60.92
+63.5%
ROTCE 15.2% → 2.58x TBV
Adjust Assumptions
13.2%
8.3%
Key Value Driver
ROTCE (13.2%) vs. cost of equity (8.3%)
Implied Market Multiple
1.58x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (15 analysts)
$35.75
Divergence from AlphaVal
40%
Summary
With ROTCE of 13.2% vs. 8.3% cost of equity, fair P/TBV is 2.12x on $23.60 tangible book, implying $50.13 per share. DDM cross-check: $34.80.
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: $34.80 (31% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $35.75 (from 15 analysts). Our estimate is 40% 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