FHN
First Horizon Corporation
$25.82
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 28.8% below fair value
You pay
$25.82
Bear
$23.41
Fair
$36.25
Bull
$43.95
Bear
$23.41
-9.3%
ROTCE 10.2% → 1.69x TBV
Fair
$36.25
+40.4%
ROTCE 13.6% → 2.61x TBV
Bull
$43.95
+70.2%
ROTCE 15.6% → 3.17x TBV
Key Value Driver
ROTCE (13.6%) vs. cost of equity (7.7%)
Implied Market Multiple
1.69x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $27.94 from 35 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $36.25 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.
Dividend-based valuation: $10.17 (74% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $27.94 (from 35 analysts). Our estimate is 42% above the consensus -- consider that gap carefully.
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