KEY
KeyCorp
$21.56
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 9.7% below fair value
You pay
$21.56
Bear
$16.71
Fair
$23.86
Bull
$31.03
Bear
$16.71
-22.5%
ROTCE 7.8% → 0.62x TBV
Fair
$23.86
+10.7%
ROTCE 10.4% → 1.05x TBV
Bull
$31.03
+43.9%
ROTCE 11.9% → 1.30x TBV
Key Value Driver
ROTCE (10.4%) vs. cost of equity (10.1%)
Implied Market Multiple
1.33x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $23.33 from 51 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $23.86 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.
Dividend-based valuation: $10.24 (58% 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