HOPE
Hope Bancorp, Inc.
$12.38
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 6.1% below fair value
You pay
$12.38
Bear
$9.22
Fair
$13.18
Bull
$17.13
Bear
$9.22
-25.5%
ROTCE 4.0% → 0.30x TBV
Fair
$13.18
+6.5%
ROTCE 3.3% → 0.30x TBV
Bull
$17.13
+38.4%
ROTCE 3.8% → 0.30x TBV
Key Value Driver
ROTCE (3.3%) vs. cost of equity (8.8%)
Implied Market Multiple
0.9x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $14.50 from 6 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $13.18 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 (8.8%). 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