FHN
First Horizon Corporation
$22.86
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 41.5% below fair value
You pay
$22.86
Bear
$25.22
Fair
$39.06
Bull
$47.36
Bear
$25.22
+10.3%
ROTCE 10.2% → 1.65x TBV
Fair
$39.06
+70.9%
ROTCE 13.6% → 2.56x TBV
Bull
$47.36
+107.2%
ROTCE 15.6% → 3.10x TBV
Adjust Assumptions
13.6%
7.7%
Key Value Driver
ROTCE (13.6%) vs. cost of equity (7.7%)
Implied Market Multiple
1.5x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (35 analysts)
$27.44
Divergence from AlphaVal
42%
Summary
With ROTCE of 13.6% vs. 7.7% cost of equity, fair P/TBV is 2.56x on $15.26 tangible book, implying $39.06 per share. DDM cross-check: $11.55.
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: $11.55 (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 $27.44 (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