WAL
Western Alliance Bancorporation
$83.41
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 36.2% below fair value
You pay
$83.41
Bear
$91.50
Fair
$130.72
Bull
$169.94
Bear
$91.50
+9.7%
ROTCE 13.2% → 1.21x TBV
Fair
$130.72
+56.7%
ROTCE 17.6% → 1.78x TBV
Bull
$169.94
+103.7%
ROTCE 20.2% → 2.13x TBV
Key Value Driver
ROTCE (17.6%) vs. cost of equity (11.6%)
Implied Market Multiple
1.65x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $80.71 from 24 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $130.72 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.
Dividend-based valuation: $20.14 (86% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $80.71 (from 24 analysts). Our estimate is 83% 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