SCHW
The Charles Schwab Corporation
$101.61
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Overvalued
Trading 8.0% above fair value
You pay
$101.61
Bear
$74.98
Fair
$94.08
Bull
$122.31
Bear
$74.98
-26.2%
ROTCE 20.0% → 3.56x TBV
Fair
$94.08
-7.4%
ROTCE 25.0% → 4.00x TBV
Bull
$122.31
+20.4%
ROTCE 30.0% → 4.00x TBV
Key Value Driver
ROTCE (29.3%) vs. cost of equity (8.5%)
Implied Market Multiple
5.84x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $124.44 from 51 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $94.08 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 $124.44 (from 51 analysts). Our estimate is 38% 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