WFC-PL
Wells Fargo & Company
$1,181.24
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 12.2% below fair value
You pay
$1,181.24
Bear
$878.12
Fair
$1,346.05
Bull
$1,626.82
Bear
$878.12
-25.7%
ROTCE 10.7% → 1.20x TBV
Fair
$1,346.05
+14.0%
ROTCE 14.2% → 1.84x TBV
Bull
$1,626.82
+37.7%
ROTCE 16.4% → 2.22x TBV
Key Value Driver
ROTCE (14.2%) vs. cost of equity (9.6%)
Implied Market Multiple
1.61x
Summary
With ROTCE of 14.2% vs. 9.6% cost of equity, fair P/TBV is 1.84x on $733.34 tangible book, implying $1346.05 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