HOME BANCSHARES, INC. (HOMB): what the price assumes

In the published model solve dated 2026-Q2, anchored at $29.62, HOME BANCSHARES, INC. (HOMB) is priced for 11.7% return on equity. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-27.

Generated: 2026-08-30 · Source: https://boothcheck.com/report/HOMB

Headline

FieldValue
TickerHOMB
CompanyHOME BANCSHARES, INC.
Current price$29.62/sh

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basisfinancials
Return on equity needed11.7%
Return on equity now11.1%
ROE gap+0.6pp
Price-to-book1.30x

Solve inputs: computed at a 9.9% cost of equity with 4% terminal growth over a 10-year stage, on common book equity (FY2026).

How unusual the bet is: within-range

ReferenceValue
vs own history+0.82σ
cohort percentile (of 122 peers)48
sustained it ~10 years at this level71%
implied end-window share0%

Valuation X-Ray

The price is supported by asset-based and earnings-power value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.07x3expensive
Earnings1.13x1expensive
Relative—0—
Growth1.36x1expensive

Families that justify the price: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 5.6%); the inversion above states its own rate.

Per-Model Detail (n=5)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth——no—
Bank Fair Value (P/TBV)—$19.481.52xyesTBVPS $15.35 × 1.27x (ROE (TTM) 10.5% / CoE 9.3%, g=5.0% (sustainable: 65% retention × ROE, 5% cap; not the terminal-growth assumption), credit 1.95% allowance/loans → ×1.00, NPL 1.09% → ×0.98)
Relative ValuationRelative——noP/E 10x (static sector reference · 2026-04), scenarios: 8.3x / 10.0x / 11.7x (bear / base = reference held flat / bull), EV/EBITDA N/Ax
Simple DDMGrowth——no—
Two-Stage DDMGrowth$21.731.36xyesStage 1: 12% for 5yr, Stage 2: 3.5% perpetual
Simple Excess ReturnAsset$25.911.14xyesBV/sh $22.73, ROE (TTM) 10.5%, ke 9.3%
Two-Stage Excess ReturnAsset$27.591.07xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth——noRev $0.9B, growth 6% (input: historical growth; tapered), Terminal P/S: 5.4x / 6.4x / 7.5x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative——noEPS $2.42, growth 12% (input: historical EPS growth), PEG=1.03 (Fair)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings——no—
Residual IncomeAsset——no—
Graham NumberAsset$35.180.84xyes√(22.5 × EPS $2.42 × BVPS $22.73) — Graham's conservative floor
EV/EBITDA RelativeRelative——no—
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings——noEPS $2.42 × (8.5 + 2×11.9%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative——no—
PEG Fair ValueRelative——noEPS $2.42 × (PEG 1.5 × growth 11.9% (input: historical EPS growth)) → PE 17.9x
Earnings YieldEarnings$26.161.13xyesEPS $2.42 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Economic-Unit Decomposition (Sum Of The Parts)

The issuer is a funded financial business. Debt, interest, and cash flows are operating inputs, so industrial EV, net-debt, WACC, and free-cash-flow lenses do not apply; value the common-equity claim with book, earnings, capital, and payout economics.

UnitRoleValuation basisRevenueReported profitValue evidenceStatus
Banking Segmentfinancialequity1.1B reported-currency—withheldunresolved standalone equity facts required

No unit-level total common-equity value is stated. Each financial unit requires supported standalone common equity, normalized earnings, capital adequacy, and payout capacity. Consolidated debt, interest, and cash are operating balances, not an enterprise-to-equity bridge; company-level book, earnings, capital, and payout lenses remain the coherent cross-checks.

Solvency

FieldValue
Share count CAGR (buyback)-0.6%

Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).

Bullet Takeaways

Bull Case

Banks are not valued like ordinary companies. The right lens is what return the bank earns on its capital and how cheaply it produces a dollar of revenue, and on both measures Home BancShares is exceptional. Its first-quarter 2026 return on average assets was 2.09%, roughly double what a typical community bank earns, and its efficiency ratio was 41.6%, meaning it converts revenue to profit with unusually little overhead. A net interest margin of 4.51% sits well above peers, the product of disciplined deposit pricing and a loan book that earns strong spreads.

The profitability is durable because it is built into how the company operates rather than borrowed from a favorable rate cycle. Net income held at $118.2 million with diluted EPS of $0.60, consistent with the prior quarter on stable revenue and tight cost control. The filing shows management actively tuning the margin, noting in its annual report that holding approximately $500 million in excess liquidity was dilutive to the net interest margin by 8 basis points, the kind of granular attention to spread that explains the sustained outperformance.

The capital position is what lets the bank play offense. CET1 stood at 16.7%, far above the level regulators require, with Tier 1 capital at the same mark and a leverage ratio of 14.3%. That excess capital is dry powder: it absorbs credit losses without threatening the dividend, funds the acquisitions that have built the franchise, and supports buybacks. Book value per share rose to $22.15, and the stock sits in the lower half of its peer group on price-to-book despite earning a return near the top of that group. The bull case is a best-in-class operator earning a premium return, priced at a discount to peers, with a fortress balance sheet behind it.

Bear Case

When the valuation methods disagree about a bank, the conservative ones usually deserve the benefit of the doubt, because a bank's reported profit is only as good as the loans behind it, and loan losses arrive suddenly. Home BancShares gave a live example this quarter: non-performing loans jumped to $182.1 million, driven mostly by a single relationship of $92.1 million placed on non-accrual. One borrower going bad is not a crisis for a bank this well-capitalized, but it is a reminder that the pristine 2.09% return on assets and the high net interest margin can be undercut by concentration in the loan book that does not show up until a credit sours.

The earnings-power and peer-multiple lenses read the stock as supported but not cheap, and that caution is well founded for a bank earning at a cyclical-best level. A 2.09% return on assets and a sub-42% efficiency ratio are extraordinary, which is precisely the problem with extrapolating them: returns this far above the industry norm tend to normalize as competition for deposits and loans intensifies and as the credit cycle turns. The company itself acknowledges in its 10-K that in an economic downturn it becomes more difficult for us to estimate the losses that we will experience in our loan portfolio, and that regulators may force a larger allowance for credit losses. An allowance build flows straight through to earnings.

The price already assumes the good times persist. At roughly 1.3 times book the market is paying for a sustained return on equity near 12%, modestly above the roughly 11% the bank has recently earned. That gap is not large, but it leaves little room if the net interest margin compresses in a falling-rate environment, if the single large non-accrual is the first of several, or if the bank's acquisitive growth, which has lifted the share count about 4.6% a year, dilutes the per-share return. The bear case is not that Home BancShares is a weak bank; it is the opposite. The risk is that a bank earning at the top of its cycle, with a fresh credit blemish, is priced for that peak to hold.

Valuation

A bank is worth the return it earns on its capital, so the valuation runs off price-to-book rather than an earnings multiple, and Home BancShares trades around 1.3 times book. That price embeds a sustained return on equity near 12%. The useful benchmark is what the bank has actually been earning: roughly 11.1% on equity, supported by a 2.09% return on average assets that is among the best for its size. The implied return sits just above the recent result, so the price is not demanding a leap, only that the current profitability holds.

The families of method line up supportively, which is what makes this a value-and-quality read rather than a growth bet. The asset-based, earnings-power, peer-multiple, and growth approaches all back the current price, and the stock sits in the lower half of its peer group on price-to-book even though it earns a return near the top of that group. That combination, premium profitability at a discounted multiple, is the heart of the valuation case. The catch is the one the credit picture raises: the implied 12% return assumes the net interest margin and the loss rate stay near today's favorable levels.

For a bank, solvency is read through regulatory capital rather than corporate leverage, and here the picture is unusually strong. CET1 of 16.7% and a leverage ratio of 14.3% sit far above what regulators require, giving the bank ample buffer to absorb the recent non-performing-loan increase and still return capital through dividends and buybacks. The valuation, then, is less about whether the bank is sound, it plainly is, than about whether returns this far above the industry can persist. The discounted multiple says the market is skeptical they fully will; the fortress capital position says the downside is well protected either way.

Catalysts

The Q1 2026 report, released in mid-April, showed top-tier profitability holding steady. Net income was $118.2 million with diluted EPS of $0.60, a return on average assets of 2.09%, a net interest margin of 4.51%, and an efficiency ratio of 41.6%, results the company described as consistent with the prior quarter on stable revenue and disciplined expense management. Book value per share rose to $22.15, and total revenue reached $266.7 million. The one blemish was credit: non-performing loans climbed to $182.1 million, the bulk of it a single $92.1 million relationship moved to non-accrual.

The forward agenda has two threads to watch. First, the credit trajectory: whether the large non-accrual resolves cleanly or signals broader stress, and whether the allowance for credit losses needs to build, which would pressure earnings. The bank's heavy capital cushion, CET1 at 16.7%, means it can absorb a setback without threatening its distributions. Second, the company's long-running acquisition strategy, which has expanded the franchise across the Southeast and Texas and is the most likely source of step-change growth. The cleanest checkpoints ahead are the quarterly net interest margin against the current 4.51%, the path of non-performing loans, and any announced deal activity that would deploy the excess capital.

Peer Cohorts (Per Segment, With Filing Citations)

Banking Segment (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Q1 2026 earnings release

View the full interactive HOMB report on boothcheck