L
Loews Corporation
$112.95
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 24.8% below fair value
You pay
$112.95
Bear
$85.84
Fair
$150.16
Bull
$188.75
Bear
$85.84
-24.0%
ROTCE 7.2% → 1.02x TBV
Fair
$150.16
+32.9%
ROTCE 9.6% → 1.78x TBV
Bull
$188.75
+67.1%
ROTCE 11.0% → 2.24x TBV
Key Value Driver
ROTCE (9.6%) vs. cost of equity (7.1%)
Implied Market Multiple
1.34x
Summary
With ROTCE of 9.6% vs. 7.1% cost of equity, fair P/TBV is 1.78x on $84.32 tangible book, implying $150.16 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.
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