ORRF
Orrstown Financial Services, Inc.
$41.66
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 46.2% below fair value
You pay
$41.66
Bear
$51.96
Fair
$77.40
Bull
$92.66
Bear
$51.96
+24.7%
ROTCE 12.5% → 2.11x TBV
Fair
$77.40
+85.8%
ROTCE 16.7% → 3.15x TBV
Bull
$92.66
+122.4%
ROTCE 19.2% → 3.77x TBV
Adjust Assumptions
16.7%
8.0%
Key Value Driver
ROTCE (16.7%) vs. cost of equity (8.0%)
Implied Market Multiple
1.69x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (7 analysts)
$41.00
Divergence from AlphaVal
89%
Summary
With ROTCE of 16.7% vs. 8.0% cost of equity, fair P/TBV is 3.15x on $24.60 tangible book, implying $77.40 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.
Wall Street's average price target is $41.00 (from 7 analysts). Our estimate is 89% above the consensus -- consider that gap carefully.
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