What is HVBC's Intrinsic value?

HV Bancorp Inc (HVBC) Intrinsic Value Analysis

Executive Summary

As of June 3, 2025, HV Bancorp Inc's estimated intrinsic value ranges from $19.73 to $32.10 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $19.73 -43.0%
Dividend Discount Model (Stable) $32.10 -7.2%

Is HV Bancorp Inc (HVBC) undervalued or overvalued?

With the current market price at $34.60, the stock appears to be significantly overvalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate HV Bancorp Inc's intrinsic value, including:

  1. Dividend Discount Model (DDM): Values the company based on expected future dividend payments

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.4 0.52
Cost of equity 5.7% 7.8%
Cost of debt 5.0% 5.0%
Tax rate 23.4% 25.8%
Debt/Equity ratio 0.13 0.13
After-tax WACC 5.5% 7.3%

Valuation Methods

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 0.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 6.8%
  • Long-term growth rate: 3.0%
  • Fair value: $19.73 (-43.0% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 7.8% (Low) to 5.7% (High)
  • Long-term growth rate: 2.0% (Low) to 4.0% (High)
  • Fair value range: $12 to $52
  • Selected fair value: $32.10 (-7.2% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $77M
Enterprise Value $87M
Trailing P/E 34.60
Forward P/E 34.37
Trailing EV/EBITDA 0.00
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.13

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Dividend Discount Model (Multi-Stage) 57% $3.95
Dividend Discount Model (Stable) 43% $4.82
Weighted Average 100% $25.03

Investment Conclusion

Based on our comprehensive valuation analysis, HV Bancorp Inc's weighted average intrinsic value is $25.03, which is approximately 27.6% below the current market price of $34.60.

Key investment considerations:

  • Conservative capital structure (Debt/Equity of 0.13)

Given these factors, we believe HV Bancorp Inc is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.