HBNC
Horizon Bancorp, Inc.
$19.60
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Overvalued
Trading 0.5% above fair value
You pay
$19.60
Bear
$13.65
Fair
$19.50
Bull
$25.35
Bear
$13.65
-30.4%
ROTCE 4.0% → 0.30x TBV
Fair
$19.50
-0.5%
ROTCE -28.6% → 0.30x TBV
Bull
$25.35
+29.3%
ROTCE -32.9% → 0.30x TBV
Adjust Assumptions
-28.6%
8.9%
Key Value Driver
ROTCE (-28.6%) vs. cost of equity (8.9%)
Implied Market Multiple
1.91x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (9 analysts)
$24.00
Divergence from AlphaVal
19%
Summary
With ROTCE of -28.6% vs. 8.9% cost of equity, fair P/TBV is 0.30x on $10.24 tangible book, implying $19.50 per share. DDM cross-check: $7.82.
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.
Return on equity (-28.6%) is below the minimum investors require (8.9%). This means the bank is worth less than the net assets on its books.
Dividend-based valuation: $7.82 (60% below 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