L
Loews Corporation
$108.47
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 29.7% below fair value
You pay
$108.47
Bear
$88.15
Fair
$154.20
Bull
$193.82
Bear
$88.15
-18.7%
ROTCE 7.2% → 1.05x TBV
Fair
$154.20
+42.2%
ROTCE 9.6% → 1.83x TBV
Bull
$193.82
+78.7%
ROTCE 11.0% → 2.30x TBV
Adjust Assumptions
9.6%
7.1%
Key Value Driver
ROTCE (9.6%) vs. cost of equity (7.1%)
Implied Market Multiple
1.29x
Summary
With ROTCE of 9.6% vs. 7.1% cost of equity, fair P/TBV is 1.83x on $84.32 tangible book, implying $154.20 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