HMST
HomeStreet, Inc.
$13.87
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 87.1% below fair value
You pay
$13.87
Bear
$70.33
Fair
$107.11
Bull
$129.18
Bear
$70.33
+407.1%
ROTCE 11.0% → 0.90x TBV
Fair
$107.11
+672.2%
ROTCE 14.7% → 1.37x TBV
Bull
$129.18
+831.3%
ROTCE 16.9% → 1.65x TBV
Key Value Driver
ROTCE (14.7%) vs. cost of equity (11.8%)
Implied Market Multiple
0.15x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $13.50 from 10 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $107.11 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.
Dividend-based valuation: $18.89 (86% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $13.50 (from 10 analysts). Our estimate is 867% 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