HOMB
Home Bancshares, Inc.
$26.61
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 34.8% below fair value
You pay
$26.61
Bear
$27.37
Fair
$40.81
Bull
$48.88
Bear
$27.37
+2.8%
ROTCE 12.4% → 2.07x TBV
Fair
$40.81
+53.4%
ROTCE 16.6% → 3.09x TBV
Bull
$48.88
+83.7%
ROTCE 19.1% → 3.70x TBV
Key Value Driver
ROTCE (16.6%) vs. cost of equity (8.1%)
Implied Market Multiple
1.87x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $31.50 from 19 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $40.81 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.
Wall Street's average price target is $31.50 (from 19 analysts). Our estimate is 39% 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