HOMB
Home Bancshares, Inc.
$30.73
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 26.5% below fair value
You pay
$30.73
Bear
$28.02
Fair
$41.79
Bull
$50.05
Bear
$28.02
-8.8%
ROTCE 12.4% → 2.11x TBV
Fair
$41.79
+36.0%
ROTCE 16.6% → 3.15x TBV
Bull
$50.05
+62.9%
ROTCE 19.1% → 3.77x TBV
Key Value Driver
ROTCE (16.6%) vs. cost of equity (8.0%)
Implied Market Multiple
2.16x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $32.67 from 19 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $41.79 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 $32.67 (from 19 analysts). Our estimate is 37% 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