PACS
PACS Group, Inc.
$37.75
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Overvalued
Trading 37.4% above fair value
Bear
$27.47
-27.2%
ROTCE 16.3% → 4.00x TBV
Fair
$27.47
-27.2%
ROTCE 21.8% → 4.00x TBV
Bull
$27.47
-27.2%
ROTCE 25.1% → 4.00x TBV
Key Value Driver
ROTCE (21.8%) vs. cost of equity (6.0%)
Implied Market Multiple
6.8x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $48.50 from 8 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $27.47 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 $48.50 (from 8 analysts). Our estimate is 54% below 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