TD
The Toronto-Dominion Bank
$123.25
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 8.5% below fair value
You pay
$123.25
Bear
$92.31
Fair
$134.68
Bull
$160.11
Bear
$92.31
-25.1%
ROTCE 14.6% → 2.08x TBV
Fair
$134.68
+9.3%
ROTCE 19.5% → 3.03x TBV
Bull
$160.11
+29.9%
ROTCE 22.4% → 3.60x TBV
Adjust Assumptions
19.5%
9.1%
Key Value Driver
ROTCE (19.5%) vs. cost of equity (9.1%)
Implied Market Multiple
2.77x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (17 analysts)
$89.52
Divergence from AlphaVal
50%
Summary
With ROTCE of 19.5% vs. 9.1% cost of equity, fair P/TBV is 3.03x on $44.44 tangible book, implying $134.68 per share. DDM cross-check: $50.23.
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: $50.23 (63% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $89.52 (from 17 analysts). Our estimate is 50% above the consensus -- consider that gap carefully.
Financial statements were converted from CAD into USD using USDCAD at 0.7120 USD per CAD.
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