WAL
Western Alliance Bancorporation
$73.73
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 50.0% below fair value
You pay
$73.73
Bear
$103.17
Fair
$147.39
Bull
$191.61
Bear
$103.17
+39.9%
ROTCE 13.2% → 1.14x TBV
Fair
$147.39
+99.9%
ROTCE 17.6% → 1.68x TBV
Bull
$191.61
+159.9%
ROTCE 20.2% → 2.00x TBV
Adjust Assumptions
17.6%
12.1%
Key Value Driver
ROTCE (17.6%) vs. cost of equity (12.1%)
Implied Market Multiple
1.46x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (24 analysts)
$85.09
Divergence from AlphaVal
73%
Summary
With ROTCE of 17.6% vs. 12.1% cost of equity, fair P/TBV is 1.68x on $50.46 tangible book, implying $147.39 per share. DDM cross-check: $20.40.
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: $20.40 (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 $85.09 (from 24 analysts). Our estimate is 73% 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