PFIS
Peoples Financial Services Corp.
$59.25
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 37.8% below fair value
You pay
$59.25
Bear
$62.09
Fair
$95.20
Bull
$115.07
Bear
$62.09
+4.8%
ROTCE 10.7% → 1.49x TBV
Fair
$95.20
+60.7%
ROTCE 14.2% → 2.29x TBV
Bull
$115.07
+94.2%
ROTCE 16.4% → 2.77x TBV
Key Value Driver
ROTCE (14.2%) vs. cost of equity (8.5%)
Implied Market Multiple
1.43x
Summary
With ROTCE of 14.2% vs. 8.5% cost of equity, fair P/TBV is 2.29x on $41.57 tangible book, implying $95.20 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