PFS
Provident Financial Services, Inc.
$24.04
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 27.9% below fair value
You pay
$24.04
Bear
$21.73
Fair
$33.34
Bull
$40.30
Bear
$21.73
-9.6%
ROTCE 10.6% → 1.46x TBV
Fair
$33.34
+38.7%
ROTCE 14.2% → 2.23x TBV
Bull
$40.30
+67.6%
ROTCE 16.3% → 2.70x TBV
Key Value Driver
ROTCE (14.2%) vs. cost of equity (8.6%)
Implied Market Multiple
1.53x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $26.00 from 10 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $33.34 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: $11.52 (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 $26.00 (from 10 analysts). Our estimate is 35% 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