PFS
Provident Financial Services, Inc.
$22.05
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 32.1% below fair value
You pay
$22.05
Bear
$21.17
Fair
$32.47
Bull
$39.26
Bear
$21.17
-4.0%
ROTCE 10.6% → 1.42x TBV
Fair
$32.47
+47.3%
ROTCE 14.2% → 2.18x TBV
Bull
$39.26
+78.1%
ROTCE 16.3% → 2.64x TBV
Key Value Driver
ROTCE (14.2%) vs. cost of equity (8.7%)
Implied Market Multiple
1.4x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $25.00 from 9 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $32.47 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.
Dividend-based valuation: $11.37 (67% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $25.00 (from 9 analysts). Our estimate is 37% 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