STC
Stewart Information Services Corporation
$72.00
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 9.8% below fair value
You pay
$72.00
Bear
$55.86
Fair
$79.80
Bull
$103.75
Bear
$55.86
-22.4%
ROTCE 20.0% → 2.75x TBV
Fair
$79.80
+10.8%
ROTCE 25.0% → 4.00x TBV
Bull
$103.75
+44.1%
ROTCE 30.0% → 4.00x TBV
Key Value Driver
ROTCE (262.7%) vs. cost of equity (9.8%)
Implied Market Multiple
49.8x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $80.50 from 8 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $79.80 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.
Dividend-based valuation: $102.38 (29% above our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
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