HBCP
Home Bancorp, Inc.
$69.22
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 48.8% below fair value
You pay
$69.22
Bear
$86.52
Fair
$135.12
Bull
$164.28
Bear
$86.52
+25.0%
ROTCE 9.8% → 1.94x TBV
Fair
$135.12
+95.2%
ROTCE 13.1% → 3.03x TBV
Bull
$164.28
+137.3%
ROTCE 15.1% → 3.68x TBV
Adjust Assumptions
13.1%
7.0%
Key Value Driver
ROTCE (13.1%) vs. cost of equity (7.0%)
Implied Market Multiple
1.55x
Summary
With ROTCE of 13.1% vs. 7.0% cost of equity, fair P/TBV is 3.03x on $44.63 tangible book, implying $135.12 per share. DDM cross-check: $192.84.
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: $192.84 (43% 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