VLY
Valley National Bancorp
$12.53
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 17.3% below fair value
You pay
$12.53
Bear
$10.61
Fair
$15.15
Bull
$19.70
Bear
$10.61
-15.4%
ROTCE 7.7% → 0.58x TBV
Fair
$15.15
+20.9%
ROTCE 10.2% → 0.98x TBV
Bull
$19.70
+57.2%
ROTCE 11.7% → 1.23x TBV
Adjust Assumptions
10.2%
10.3%
Key Value Driver
ROTCE (10.2%) vs. cost of equity (10.3%)
Implied Market Multiple
1.19x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (21 analysts)
$16.50
Divergence from AlphaVal
8%
Summary
With ROTCE of 10.2% vs. 10.3% cost of equity, fair P/TBV is 0.98x on $10.57 tangible book, implying $15.15 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.
Return on equity (10.2%) is below the minimum investors require (10.3%). This means the bank is worth less than the net assets on its books.
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