HRTG
Heritage Insurance Holdings, Inc.
$22.88
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 54.7% below fair value
You pay
$22.88
Bear
$33.76
Fair
$50.48
Bull
$50.48
Bear
$33.76
+47.5%
ROTCE 20.0% → 2.67x TBV
Fair
$50.48
+120.6%
ROTCE 25.0% → 4.00x TBV
Bull
$50.48
+120.6%
ROTCE 30.0% → 4.00x TBV
Key Value Driver
ROTCE (47.6%) vs. cost of equity (10.0%)
Implied Market Multiple
1.69x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $36.00 from 9 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $50.48 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 $36.00 (from 9 analysts). Our estimate is 50% 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