SCHW
The Charles Schwab Corporation
$90.15
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 3.3% below fair value
You pay
$90.15
Bear
$71.21
Fair
$93.19
Bull
$121.15
Bear
$71.21
-21.0%
ROTCE 20.0% → 3.42x TBV
Fair
$93.19
+3.4%
ROTCE 25.0% → 4.00x TBV
Bull
$121.15
+34.4%
ROTCE 30.0% → 4.00x TBV
Key Value Driver
ROTCE (29.3%) vs. cost of equity (8.7%)
Implied Market Multiple
5.18x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $121.89 from 50 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $93.19 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 $121.89 (from 50 analysts). Our estimate is 36% 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