L
Loews Corporation
$109.72
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 26.5% below fair value
You pay
$109.72
Bear
$85.39
Fair
$149.37
Bull
$187.76
Bear
$85.39
-22.2%
ROTCE 7.2% → 1.01x TBV
Fair
$149.37
+36.1%
ROTCE 9.6% → 1.77x TBV
Bull
$187.76
+71.1%
ROTCE 11.0% → 2.23x TBV
Adjust Assumptions
9.6%
7.2%
Key Value Driver
ROTCE (9.6%) vs. cost of equity (7.2%)
Implied Market Multiple
1.3x
Summary
With ROTCE of 9.6% vs. 7.2% cost of equity, fair P/TBV is 1.77x on $84.32 tangible book, implying $149.37 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