HIPO
Hippo Holdings Inc.
$29.33
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 9.2% below fair value
You pay
$29.33
Bear
$22.62
Fair
$32.32
Bull
$42.01
Bear
$22.62
-22.9%
ROTCE 12.3% → 0.98x TBV
Fair
$32.32
+10.2%
ROTCE 16.5% → 1.46x TBV
Bull
$42.01
+43.2%
ROTCE 18.9% → 1.76x TBV
Key Value Driver
ROTCE (16.5%) vs. cost of equity (12.5%)
Implied Market Multiple
2.18x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $28.38 from 6 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $32.32 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.
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