HBNC
Horizon Bancorp, Inc.
$18.34
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 19.2% below fair value
You pay
$18.34
Bear
$15.89
Fair
$22.70
Bull
$29.51
Bear
$15.89
-13.4%
ROTCE 4.0% → 0.30x TBV
Fair
$22.70
+23.8%
ROTCE -28.6% → 0.30x TBV
Bull
$29.51
+60.9%
ROTCE -32.9% → 0.30x TBV
Key Value Driver
ROTCE (-28.6%) vs. cost of equity (8.8%)
Implied Market Multiple
1.79x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $20.50 from 9 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $22.70 per share.
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 (8.8%). This means the bank is worth less than the net assets on its books.
Dividend-based valuation: $9.53 (59% 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