SCHW
The Charles Schwab Corporation
$91.14
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Overvalued
Trading 17.2% above fair value
You pay
$91.14
Bear
$60.81
Fair
$77.74
Bull
$101.06
Bear
$60.81
-33.3%
ROTCE 20.0% → 3.48x TBV
Fair
$77.74
-14.7%
ROTCE 25.0% → 4.00x TBV
Bull
$101.06
+10.9%
ROTCE 30.0% → 4.00x TBV
Adjust Assumptions
29.3%
8.6%
Key Value Driver
ROTCE (29.3%) vs. cost of equity (8.6%)
Implied Market Multiple
5.21x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (51 analysts)
$118.93
Divergence from AlphaVal
35%
Summary
With ROTCE of 29.3% vs. 8.6% cost of equity, fair P/TBV is 4.00x on $17.49 tangible book, implying $77.74 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 $118.93 (from 51 analysts). Our estimate is 35% 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