HBCP
Home Bancorp, Inc.
$70.21
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 47.5% below fair value
You pay
$70.21
Bear
$85.55
Fair
$133.61
Bull
$162.44
Bear
$85.55
+21.9%
ROTCE 9.8% → 1.91x TBV
Fair
$133.61
+90.3%
ROTCE 13.1% → 2.98x TBV
Bull
$162.44
+131.4%
ROTCE 15.1% → 3.63x TBV
Key Value Driver
ROTCE (13.1%) vs. cost of equity (7.1%)
Implied Market Multiple
1.57x
Summary
With ROTCE of 13.1% vs. 7.1% cost of equity, fair P/TBV is 2.98x on $44.77 tangible book, implying $133.61 per share. DDM cross-check: $181.27.
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: $181.27 (36% above our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
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