PRA
ProAssurance Corporation
$25.00
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Overvalued
Trading 129.6% above fair value
You pay
$25.00
Bear
$7.62
Fair
$10.89
Bull
$14.16
Bear
$7.62
-69.5%
ROTCE 4.0% → 0.30x TBV
Fair
$10.89
-56.4%
ROTCE 4.1% → 0.30x TBV
Bull
$14.16
-43.4%
ROTCE 4.7% → 0.37x TBV
Adjust Assumptions
4.1%
6.0%
Key Value Driver
ROTCE (4.1%) vs. cost of equity (6.0%)
Implied Market Multiple
1.04x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (11 analysts)
$18.33
Divergence from AlphaVal
41%
Summary
With ROTCE of 4.1% vs. 6.0% cost of equity, fair P/TBV is 0.30x on $23.98 tangible book, implying $10.89 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.
Return on equity (4.1%) is below the minimum investors require (6.0%). This means the bank is worth less than the net assets on its books.
Wall Street's average price target is $18.33 (from 11 analysts). Our estimate is 41% below 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