PFS
Provident Financial Services, Inc.
$22.46
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 32.3% below fair value
You pay
$22.46
Bear
$21.63
Fair
$33.18
Bull
$40.11
Bear
$21.63
-3.7%
ROTCE 10.6% → 1.38x TBV
Fair
$33.18
+47.7%
ROTCE 14.2% → 2.11x TBV
Bull
$40.11
+78.6%
ROTCE 16.3% → 2.55x TBV
Adjust Assumptions
14.2%
8.8%
Key Value Driver
ROTCE (14.2%) vs. cost of equity (8.8%)
Implied Market Multiple
1.43x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (10 analysts)
$26.50
Divergence from AlphaVal
25%
Summary
With ROTCE of 14.2% vs. 8.8% cost of equity, fair P/TBV is 2.11x on $15.73 tangible book, implying $33.18 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 $26.50 (from 10 analysts). Our estimate is 25% 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