HOMB
Home Bancshares, Inc.
$29.68
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 34.2% below fair value
You pay
$29.68
Bear
$30.27
Fair
$45.14
Bull
$54.06
Bear
$30.27
+2.0%
ROTCE 12.4% → 2.13x TBV
Fair
$45.14
+52.1%
ROTCE 16.6% → 3.17x TBV
Bull
$54.06
+82.1%
ROTCE 19.1% → 3.80x TBV
Adjust Assumptions
16.6%
8.0%
Key Value Driver
ROTCE (16.6%) vs. cost of equity (8.0%)
Implied Market Multiple
2.09x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (19 analysts)
$33.25
Divergence from AlphaVal
36%
Summary
With ROTCE of 16.6% vs. 8.0% cost of equity, fair P/TBV is 3.17x on $14.23 tangible book, implying $45.14 per share. DDM cross-check: $53.29.
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 $33.25 (from 19 analysts). Our estimate is 36% 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