WFC-PZ
Wells Fargo & Company
$18.71
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 78.6% below fair value
You pay
$18.71
Bear
$56.92
Fair
$87.25
Bull
$105.45
Bear
$56.92
+204.2%
ROTCE 10.7% → 1.20x TBV
Fair
$87.25
+366.4%
ROTCE 14.2% → 1.84x TBV
Bull
$105.45
+463.6%
ROTCE 16.4% → 2.22x TBV
Key Value Driver
ROTCE (14.2%) vs. cost of equity (9.6%)
Implied Market Multiple
0.39x
Summary
With ROTCE of 14.2% vs. 9.6% cost of equity, fair P/TBV is 1.84x on $47.54 tangible book, implying $87.25 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