FHN
First Horizon Corporation
$24.65
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 37.2% below fair value
You pay
$24.65
Bear
$25.37
Fair
$39.28
Bull
$47.63
Bear
$25.37
+2.9%
ROTCE 10.2% → 1.66x TBV
Fair
$39.28
+59.4%
ROTCE 13.6% → 2.58x TBV
Bull
$47.63
+93.2%
ROTCE 15.6% → 3.13x TBV
Adjust Assumptions
13.6%
7.7%
Key Value Driver
ROTCE (13.6%) vs. cost of equity (7.7%)
Implied Market Multiple
1.62x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (35 analysts)
$28.10
Divergence from AlphaVal
40%
Summary
With ROTCE of 13.6% vs. 7.7% cost of equity, fair P/TBV is 2.58x on $15.24 tangible book, implying $39.28 per share. DDM cross-check: $11.61.
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: $11.61 (70% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $28.10 (from 35 analysts). Our estimate is 40% 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