STT
State Street Corporation
$194.26
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Overvalued
Trading 3.9% above fair value
You pay
$194.26
Bear
$130.86
Fair
$186.94
Bull
$243.02
Bear
$130.86
-32.6%
ROTCE 11.8% → 0.96x TBV
Fair
$186.94
-3.8%
ROTCE 15.7% → 1.45x TBV
Bull
$243.02
+25.1%
ROTCE 18.1% → 1.74x TBV
Adjust Assumptions
15.7%
12.1%
Key Value Driver
ROTCE (15.7%) vs. cost of equity (12.1%)
Implied Market Multiple
2.87x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (37 analysts)
$182.00
Divergence from AlphaVal
3%
Summary
With ROTCE of 15.7% vs. 12.1% cost of equity, fair P/TBV is 1.45x on $67.74 tangible book, implying $186.94 per share. DDM cross-check: $90.89.
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: $90.89 (51% 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