TRV
The Travelers Companies, Inc.
$368.75
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 23.0% below fair value
Bear
$478.95
+29.9%
ROTCE 18.9% → 4.00x TBV
Fair
$478.95
+29.9%
ROTCE 25.0% → 4.00x TBV
Bull
$478.95
+29.9%
ROTCE 29.0% → 4.00x TBV
Adjust Assumptions
25.2%
6.7%
Key Value Driver
ROTCE (25.2%) vs. cost of equity (6.7%)
Implied Market Multiple
3.08x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (44 analysts)
$353.80
Divergence from AlphaVal
35%
Summary
With ROTCE of 25.2% vs. 6.7% cost of equity, fair P/TBV is 4.00x on $119.74 tangible book, implying $478.95 per share. DDM cross-check: $368.72.
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.
Wall Street's average price target is $353.80 (from 44 analysts). Our estimate is 35% above the consensus -- consider that gap carefully.
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