SFNC
Simmons First National Corporation
$22.45
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 20.1% below fair value
You pay
$22.45
Bear
$19.68
Fair
$28.11
Bull
$36.54
Bear
$19.68
-12.4%
ROTCE 4.0% → 0.30x TBV
Fair
$28.11
+25.2%
ROTCE -19.7% → 0.30x TBV
Bull
$36.54
+62.7%
ROTCE -22.7% → 0.30x TBV
Adjust Assumptions
-19.7%
9.5%
Key Value Driver
ROTCE (-19.7%) vs. cost of equity (9.5%)
Implied Market Multiple
1.62x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (9 analysts)
$26.17
Divergence from AlphaVal
7%
Summary
With ROTCE of -19.7% vs. 9.5% cost of equity, fair P/TBV is 0.30x on $13.88 tangible book, implying $28.11 per share. DDM cross-check: $13.02.
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 (-19.7%) is below the minimum investors require (9.5%). This means the bank is worth less than the net assets on its books.
Dividend-based valuation: $13.02 (54% below 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