STC
Stewart Information Services Corporation
$66.24
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 16.8% below fair value
You pay
$66.24
Bear
$55.74
Fair
$79.63
Bull
$103.52
Bear
$55.74
-15.8%
ROTCE 20.0% → 2.78x TBV
Fair
$79.63
+20.2%
ROTCE 25.0% → 3.65x TBV
Bull
$103.52
+56.3%
ROTCE 30.0% → 4.00x TBV
Adjust Assumptions
262.7%
9.8%
Key Value Driver
ROTCE (262.7%) vs. cost of equity (9.8%)
Implied Market Multiple
45.82x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (8 analysts)
$87.00
Divergence from AlphaVal
8%
Summary
With ROTCE of 262.7% vs. 9.8% cost of equity, fair P/TBV is 3.65x on $1.45 tangible book, implying $79.63 per share. DDM cross-check: $62.98.
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