Today we're going to take a closer look at mid-cap Financial Services company Home BancShares, whose shares are currently trading at $23.03. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!
Home Bancshares, Inc. (Conway, AR) operates as the bank holding company for Centennial Bank that provides commercial and retail banking, and related financial services to businesses, real estate developers and investors, individuals, and municipalities. The company belongs to the Financial Services sector, which has an average price to earnings (P/E) ratio of 13.34 and an average price to book (P/B) ratio of 1.95. In contrast, Home BancShares has a trailing 12 month P/E ratio of 14.7 and a P/B ratio of 1.3.
P/B ratios are calculated by dividing the company's market value by its equity's book value. Equity refers to all of the company's assets minus its liabilities. Traditionally, a P/B ratio of around 1 shows that a company is fairly valued, but owing to consistently higher valuations in the modern era, investors generally compare against sector averages.
Home BancShares's PEG ratio is 2.17, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.