WFC-PD
Wells Fargo & Company
$16.46
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 82.2% below fair value
You pay
$16.46
Bear
$60.34
Fair
$92.50
Bull
$111.79
Bear
$60.34
+266.6%
ROTCE 10.7% → 1.25x TBV
Fair
$92.50
+462.0%
ROTCE 14.2% → 1.92x TBV
Bull
$111.79
+579.2%
ROTCE 16.4% → 2.32x TBV
Key Value Driver
ROTCE (14.2%) vs. cost of equity (9.3%)
Implied Market Multiple
0.34x
Summary
With ROTCE of 14.2% vs. 9.3% cost of equity, fair P/TBV is 1.92x on $48.26 tangible book, implying $92.50 per share. DDM cross-check: $15.94.
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: $15.94 (83% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
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