GABC
German American Bancorp, Inc.
$48.16
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 20.8% below fair value
You pay
$48.16
Bear
$40.07
Fair
$60.83
Bull
$73.29
Bear
$40.07
-16.8%
ROTCE 11.2% → 2.00x TBV
Fair
$60.83
+26.3%
ROTCE 15.0% → 3.03x TBV
Bull
$73.29
+52.2%
ROTCE 17.2% → 3.66x TBV
Adjust Assumptions
15.0%
7.6%
Key Value Driver
ROTCE (15.0%) vs. cost of equity (7.6%)
Implied Market Multiple
2.4x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (8 analysts)
$54.50
Divergence from AlphaVal
12%
Summary
With ROTCE of 15.0% vs. 7.6% cost of equity, fair P/TBV is 3.03x on $20.05 tangible book, implying $60.83 per share. DDM cross-check: $96.91.
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: $96.91 (59% above 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