KEY
KeyCorp
$21.21
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 7.0% below fair value
You pay
$21.21
Bear
$15.96
Fair
$22.80
Bull
$29.64
Bear
$15.96
-24.8%
ROTCE 7.8% → 0.60x TBV
Fair
$22.80
+7.5%
ROTCE 10.4% → 1.02x TBV
Bull
$29.64
+39.7%
ROTCE 11.9% → 1.26x TBV
Adjust Assumptions
10.4%
10.3%
Key Value Driver
ROTCE (10.4%) vs. cost of equity (10.3%)
Implied Market Multiple
1.3x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (51 analysts)
$25.13
Divergence from AlphaVal
9%
Summary
With ROTCE of 10.4% vs. 10.3% cost of equity, fair P/TBV is 1.02x on $16.33 tangible book, implying $22.80 per share. DDM cross-check: $8.93.
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: $8.93 (61% 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