SPFI
South Plains Financial, Inc.
$42.75
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 50.1% below fair value
You pay
$42.75
Bear
$53.94
Fair
$85.59
Bull
$104.57
Bear
$53.94
+26.2%
ROTCE 9.3% → 1.85x TBV
Fair
$85.59
+100.2%
ROTCE 12.4% → 2.94x TBV
Bull
$104.57
+144.6%
ROTCE 14.2% → 3.59x TBV
Key Value Driver
ROTCE (12.4%) vs. cost of equity (6.8%)
Implied Market Multiple
1.47x
Summary
With ROTCE of 12.4% vs. 6.8% cost of equity, fair P/TBV is 2.94x on $29.11 tangible book, implying $85.59 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.
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