HMN
Horace Mann Educators Corporation
$46.33
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 49.5% below fair value
Bear
$91.72
+98.0%
ROTCE 13.1% → 4.00x TBV
Fair
$91.72
+98.0%
ROTCE 17.5% → 4.00x TBV
Bull
$91.72
+98.0%
ROTCE 20.1% → 4.00x TBV
Adjust Assumptions
17.5%
6.0%
Key Value Driver
ROTCE (17.5%) vs. cost of equity (6.0%)
Implied Market Multiple
2.02x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (9 analysts)
$59.00
Divergence from AlphaVal
55%
Summary
With ROTCE of 17.5% vs. 6.0% cost of equity, fair P/TBV is 4.00x on $22.93 tangible book, implying $91.72 per share. DDM cross-check: $40.69.
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: $40.69 (56% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $59.00 (from 9 analysts). Our estimate is 55% above the consensus -- consider that gap carefully.
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