HBAN Huntington Bancshares
Cheaper at 1.4x book, but an 11% ROE barely beats cost of equity; still modestly overvalued.
The story
Huntington is a scaled Midwest regional with a sticky, granular deposit franchise that it has expanded through acquisitions; revenue is up to 9.68B, but trailing ROE is only 11.1% on 21.6B of book equity. Credit quality and capital are sound, and the buyback increase shows confidence in capital. However, management cut its outlook just as the Fed hiked, a sign that deposit betas are catching up and late-cycle margins are near their peak. At 15.27 the stock trades at about 1.43x book (about 10.70 per share), down from 1.6x, but that still prices in more ROE improvement than the history supports.
I trimmed normalized ROE from 11.5% to 11.3% because the outlook cut undercuts the ROTCE-expansion thesis; it now sits just above the 11.1% trailing figure and only about 1pt over the roughly 10.4% cost of equity (5.26% + 1.15 x 4.5%). Book growth, beta and failure probability are unchanged because none of those facts moved: book still compounds modestly net of buybacks, and there is regional-bank tail risk from CRE and deposit flight.
Value drivers
| Return on equity (normalized) | 11.3% |
| Book-value growth (Y1) | 4.5% |
| Terminal book growth | 4.0% |
| Beta | 1.15 |
| Failure probability | 1.2% |
| Cost of equity | 10.4% |
Valuation bridge
| PV of excess returns | 1.34B |
| PV of terminal excess | 1.64B |
| Equity value | 24.30B |
| ÷ shares → per share | $12.03 |
News
bearish -0.40 · 8 articles
- 3 Regional Bank Stocks Retail Investors Are Watching As Higher Rates Lift Margins
- Huntington Rewards Shareholders With Higher 2027 Buyback Plan
- Huntington Cut Its Outlook Right as the Fed Hiked. First Crack in Regional-Bank Margins?
- These 3 Stocks Under $20 Have Wall Street Looking Past the Share Price
- Huntington Bancshares Cuts 2027 Outlook as Margin, Loan Growth Pressures Mount
- Huntington Shares Tumble 5.6% on 2026 NII and 2027 EPS Outlook Cut
- Is Huntington Bancshares Stock Underperforming the S&P 500?
- Huntington Bancshares Inc's Dividend Analysis
Projected excess returns on equity
| Yr | Book equity | ROE | Excess return | PV |
|---|---|---|---|---|
| 1 | 21.61B | 11.3% | 188.02M | 170.26M |
| 2 | 22.58B | 11.3% | 196.48M | 161.12M |
| 3 | 23.59B | 11.3% | 205.21M | 152.38M |
| 4 | 24.62B | 11.3% | 214.22M | 144.05M |
| 5 | 25.69B | 11.3% | 223.50M | 136.09M |
| 6 | 26.79B | 11.3% | 233.06M | 128.51M |
| 7 | 27.92B | 11.3% | 242.90M | 121.29M |
| 8 | 29.08B | 11.3% | 253.02M | 114.41M |
| 9 | 30.28B | 11.3% | 263.42M | 107.86M |
| 10 | 31.51B | 11.3% | 274.10M | 101.64M |
Key risks
- Deposit costs repricing faster than asset yields after the Fed hike, compressing NIM
- Commercial real estate and middle-market credit losses as the cycle turns
- Integration and dilution risk from acquisitions, plus buybacks eroding capital buffers
Catalysts
- Delivery on the 2027 ROTCE targets with stable NIM through the rate move
- Regulatory capital relief for regionals, allowing larger buybacks