HMST
HomeStreet, Inc.
$13.87
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 89.4% below fair value
You pay
$13.87
Bear
$85.70
Fair
$130.51
Bull
$157.40
Bear
$85.70
+517.9%
ROTCE 11.0% → 0.90x TBV
Fair
$130.51
+841.0%
ROTCE 14.7% → 1.37x TBV
Bull
$157.40
+1034.8%
ROTCE 16.9% → 1.65x TBV
Adjust Assumptions
14.7%
11.8%
Key Value Driver
ROTCE (14.7%) vs. cost of equity (11.8%)
Implied Market Multiple
0.15x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (10 analysts)
$13.50
Divergence from AlphaVal
867%
Summary
With ROTCE of 14.7% vs. 11.8% cost of equity, fair P/TBV is 1.37x on $95.48 tangible book, implying $130.51 per share. DDM cross-check: $18.89.
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