What is RBB's Intrinsic value?

RBB Bancorp (RBB) Intrinsic Value Analysis

Executive Summary

As of June 8, 2025, RBB Bancorp's estimated intrinsic value ranges from $17.65 to $18.88 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $18.88 +10.6%
Dividend Discount Model (Stable) $17.65 +3.4%

Is RBB Bancorp (RBB) undervalued or overvalued?

With the current market price at $17.07, the stock appears to be fairly valued.

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 RBB Bancorp'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 1.03 1.12
Cost of equity 8.6% 11.1%
Cost of debt 5.0% 5.0%
Tax rate 29.5% 29.6%
Debt/Equity ratio 0.44 0.44
After-tax WACC 7.1% 8.8%

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: 55.5%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 9.9%
  • Long-term growth rate: 3.5%
  • Fair value: $18.88 (10.6% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 11.1% (Low) to 8.6% (High)
  • Long-term growth rate: 2.5% (Low) to 4.5% (High)
  • Fair value range: $10 to $26
  • Selected fair value: $17.65 (3.4% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $303M
Enterprise Value $438M
Trailing P/E 14.48
Forward P/E 11.13
Trailing EV/EBITDA 0.00
Current Dividend Yield 383.36%
Dividend Growth Rate (5Y) 15.44%
Debt-to-Equity Ratio 0.44

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% $3.78
Dividend Discount Model (Stable) 43% $2.65
Weighted Average 100% $18.35

Investment Conclusion

Based on our comprehensive valuation analysis, RBB Bancorp's weighted average intrinsic value is $18.35, which is approximately 7.5% above the current market price of $17.07.

Key investment considerations:

  • Historical dividend growth of 15.44%

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