HOPE
Hope Bancorp, Inc.
$13.56
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Overvalued
Trading 5.6% above fair value
You pay
$13.56
Bear
$8.99
Fair
$12.85
Bull
$16.70
Bear
$8.99
-33.7%
ROTCE 4.0% → 0.30x TBV
Fair
$12.85
-5.3%
ROTCE 3.3% → 0.30x TBV
Bull
$16.70
+23.1%
ROTCE 3.8% → 0.30x TBV
Adjust Assumptions
3.3%
9.0%
Key Value Driver
ROTCE (3.3%) vs. cost of equity (9.0%)
Implied Market Multiple
0.99x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (6 analysts)
$16.00
Divergence from AlphaVal
20%
Summary
With ROTCE of 3.3% vs. 9.0% cost of equity, fair P/TBV is 0.30x on $13.76 tangible book, implying $12.85 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.
Return on equity (3.3%) is below the minimum investors require (9.0%). This means the bank is worth less than the net assets on its books.
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