WFC-PL
Wells Fargo & Company
$1,174.00
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 16.5% below fair value
You pay
$1,174.00
Bear
$916.98
Fair
$1,405.63
Bull
$1,698.82
Bear
$916.98
-21.9%
ROTCE 10.7% → 1.25x TBV
Fair
$1,405.63
+19.7%
ROTCE 14.2% → 1.92x TBV
Bull
$1,698.82
+44.7%
ROTCE 16.4% → 2.32x TBV
Key Value Driver
ROTCE (14.2%) vs. cost of equity (9.3%)
Implied Market Multiple
1.6x
Summary
With ROTCE of 14.2% vs. 9.3% cost of equity, fair P/TBV is 1.92x on $733.34 tangible book, implying $1405.63 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