STC
Stewart Information Services Corporation
$42.96
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 46.1% below fair value
You pay
$42.96
Bear
$55.74
Fair
$79.63
Bull
$103.52
Bear
$55.74
+29.8%
ROTCE 20.0% → 2.63x TBV
Fair
$79.63
+85.4%
ROTCE 25.0% → 3.45x TBV
Bull
$103.52
+141.0%
ROTCE 30.0% → 4.00x TBV
Adjust Assumptions
262.7%
10.1%
Key Value Driver
ROTCE (262.7%) vs. cost of equity (10.1%)
Implied Market Multiple
29.81x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (9 analysts)
$78.50
Divergence from AlphaVal
1%
Summary
With ROTCE of 262.7% vs. 10.1% cost of equity, fair P/TBV is 3.45x on $1.44 tangible book, implying $79.63 per share. DDM cross-check: $57.58.
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: $57.58 (28% below 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