SFNC
Simmons First National Corporation
$21.34
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 28.3% below fair value
You pay
$21.34
Bear
$20.83
Fair
$29.75
Bull
$38.68
Bear
$20.83
-2.4%
ROTCE 4.0% → 0.30x TBV
Fair
$29.75
+39.4%
ROTCE -19.7% → 0.30x TBV
Bull
$38.68
+81.2%
ROTCE -22.7% → 0.30x TBV
Key Value Driver
ROTCE (-19.7%) vs. cost of equity (9.4%)
Implied Market Multiple
1.54x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $23.00 from 9 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $29.75 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 (-19.7%) is below the minimum investors require (9.4%). This means the bank is worth less than the net assets on its books.
Dividend-based valuation: $13.97 (56% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $23.00 (from 9 analysts). Our estimate is 37% 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