HRTG
Heritage Insurance Holdings, Inc.
$37.08
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 31.5% below fair value
You pay
$37.08
Bear
$41.26
Fair
$54.15
Bull
$55.23
Bear
$41.26
+11.3%
ROTCE 20.0% → 2.99x TBV
Fair
$54.15
+46.0%
ROTCE 25.0% → 3.92x TBV
Bull
$55.23
+48.9%
ROTCE 30.0% → 4.00x TBV
Adjust Assumptions
47.6%
9.4%
Key Value Driver
ROTCE (47.6%) vs. cost of equity (9.4%)
Implied Market Multiple
2.69x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (9 analysts)
$36.50
Divergence from AlphaVal
48%
Summary
With ROTCE of 47.6% vs. 9.4% cost of equity, fair P/TBV is 3.92x on $13.81 tangible book, implying $54.15 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 $36.50 (from 9 analysts). Our estimate is 48% 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