HTH
Hilltop Holdings Inc.
$37.22
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Overvalued
Trading 20.7% above fair value
You pay
$37.22
Bear
$16.62
Fair
$30.85
Bull
$39.37
Bear
$16.62
-55.3%
ROTCE 6.6% → 0.49x TBV
Fair
$30.85
-17.1%
ROTCE 8.7% → 0.91x TBV
Bull
$39.37
+5.8%
ROTCE 10.0% → 1.17x TBV
Key Value Driver
ROTCE (8.7%) vs. cost of equity (9.2%)
Implied Market Multiple
1.15x
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 12 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $30.85 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 (8.7%) is below the minimum investors require (9.2%). This means the bank is worth less than the net assets on its books.
Dividend-based valuation: $38.47 (30% above our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
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