PB
Prosperity Bancshares, Inc.
$66.33
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 21.0% below fair value
You pay
$66.33
Bear
$58.80
Fair
$84.00
Bull
$109.20
Bear
$58.80
-11.4%
ROTCE 10.0% → 1.50x TBV
Fair
$84.00
+26.6%
ROTCE 13.4% → 2.32x TBV
Bull
$109.20
+64.6%
ROTCE 15.4% → 2.82x TBV
Adjust Assumptions
13.4%
8.0%
Key Value Driver
ROTCE (13.4%) vs. cost of equity (8.0%)
Implied Market Multiple
1.96x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (33 analysts)
$75.75
Divergence from AlphaVal
11%
Summary
With ROTCE of 13.4% vs. 8.0% cost of equity, fair P/TBV is 2.32x on $33.80 tangible book, implying $84.00 per share. DDM cross-check: $48.18.
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.
Dividend-based valuation: $48.18 (43% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
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