HBCP
Home Bancorp, Inc.
$64.97
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 50.9% below fair value
You pay
$64.97
Bear
$84.79
Fair
$132.42
Bull
$160.99
Bear
$84.79
+30.5%
ROTCE 9.8% → 1.89x TBV
Fair
$132.42
+103.8%
ROTCE 13.1% → 2.96x TBV
Bull
$160.99
+147.8%
ROTCE 15.1% → 3.60x TBV
Key Value Driver
ROTCE (13.1%) vs. cost of equity (7.1%)
Implied Market Multiple
1.45x
Summary
With ROTCE of 13.1% vs. 7.1% cost of equity, fair P/TBV is 2.96x on $44.77 tangible book, implying $132.42 per share. DDM cross-check: $101.16.
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.
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