HOMB
Home Bancshares, Inc.
$30.07
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 29.2% below fair value
You pay
$30.07
Bear
$28.50
Fair
$42.50
Bull
$50.90
Bear
$28.50
-5.2%
ROTCE 12.4% → 1.99x TBV
Fair
$42.50
+41.3%
ROTCE 16.6% → 2.97x TBV
Bull
$50.90
+69.3%
ROTCE 19.1% → 3.55x TBV
Adjust Assumptions
16.6%
8.2%
Key Value Driver
ROTCE (16.6%) vs. cost of equity (8.2%)
Implied Market Multiple
2.1x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (19 analysts)
$33.67
Divergence from AlphaVal
26%
Summary
With ROTCE of 16.6% vs. 8.2% cost of equity, fair P/TBV is 2.97x on $14.33 tangible book, implying $42.50 per share. DDM cross-check: $40.16.
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.
Wall Street's average price target is $33.67 (from 19 analysts). Our estimate is 26% 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