ORRF
Orrstown Financial Services, Inc.
$40.42
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 42.3% below fair value
You pay
$40.42
Bear
$47.01
Fair
$70.02
Bull
$83.83
Bear
$47.01
+16.3%
ROTCE 12.5% → 2.11x TBV
Fair
$70.02
+73.2%
ROTCE 16.7% → 3.14x TBV
Bull
$83.83
+107.4%
ROTCE 19.2% → 3.76x TBV
Key Value Driver
ROTCE (16.7%) vs. cost of equity (8.1%)
Implied Market Multiple
1.64x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $41.00 from 6 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $70.02 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 6 analysts). Our estimate is 88% 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