WBS
Webster Financial Corporation
$71.80
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 7.5% below fair value
You pay
$71.80
Bear
$51.75
Fair
$77.65
Bull
$93.19
Bear
$51.75
-27.9%
ROTCE 12.0% → 1.36x TBV
Fair
$77.65
+8.1%
ROTCE 16.0% → 2.04x TBV
Bull
$93.19
+29.8%
ROTCE 18.4% → 2.45x TBV
Key Value Driver
ROTCE (16.0%) vs. cost of equity (9.9%)
Implied Market Multiple
1.85x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $74.33 from 31 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $77.65 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.
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