• If you are wondering whether Hilltop Holdings is attractively priced or starting to look expensive, you are in the right place for a closer look at what the current share price might imply.
• The stock most recently closed at US$37.02, with returns of 19.9% over 1 year, 9.2% year to date, 29.8% over 3 years and 6.0% over 5 years, alongside a 4.6% decline over the last 7 days and a 4.1% decline over the last 30 days.
• Recent share price moves sit against a backdrop of ongoing updates about Hilltop Holdings and its position in the US banking sector, including commentary on how regional banks are managing credit risk and capital strength. These types of headlines can influence how investors weigh potential rewards against risk, even when the underlying business story changes more slowly.
• Our Simply Wall St valuation checks currently give Hilltop Holdings a value score of 1 out of 6, which suggests only one of the six tests flags the stock as undervalued. Next, we will walk through the usual valuation methods and then finish with a broader way to think about what the numbers are really telling you.

Hilltop Holdings scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Hilltop Holdings Excess Returns Analysis

The Excess Returns model looks at how much profit a company earns on its equity compared with the return that shareholders require. If the return on equity is higher than the cost of equity, the stock can justify a premium to book value. If it is lower, the model tends to point to a discount.

For Hilltop Holdings, the inputs are quite specific. Book value is US$36.42 per share, with a stable earnings per share estimate of US$2.37, based on weighted future return on equity estimates from 4 analysts. The average return on equity used in the model is 6.17%, while the cost of equity is US$3.09 per share, which results in an excess return of US$0.71 per share in the negative. Stable book value is set at US$38.48 per share, again taken from weighted book value estimates from 4 analysts.

Feeding these assumptions into the Excess Returns framework gives an estimated intrinsic value of about US$23.02 per share. Compared with the recent share price of US$37.02, this implies the stock is around 60.8% overvalued according to this method.

Result: OVERVALUED

Our Excess Returns analysis suggests Hilltop Holdings may be overvalued by 60.8%. Discover 47 high quality undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Hilltop Holdings.

Approach 2: Hilltop Holdings Price vs Earnings

For a profitable bank, the P/E ratio is a practical way to think about value because it connects the share price directly to current earnings. In simple terms, higher growth expectations or lower perceived risk can justify a higher P/E, while lower growth or higher risk tend to align with a lower, more conservative P/E.

Hilltop Holdings is trading on a P/E of 13.29x. That sits close to both the peer average of 13.46x and the broader Banks industry average of 11.59x, so on plain comparisons the valuation does not look extreme in either direction. To refine this, Simply Wall St uses a proprietary “Fair Ratio” model, which estimates what a company’s P/E might be given its earnings growth profile, profit margins, risk characteristics, industry and market cap.

Because this Fair Ratio of 8.26x is tailored to Hilltop Holdings rather than based on broad sector groupings, it can be more useful than simple peer or industry checks. Putting the two side by side, the current P/E of 13.29x is above the Fair Ratio of 8.26x, which points to the shares looking expensive on this metric.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Hilltop Holdings Narrative

Earlier we mentioned that there is an even better way to understand valuation. On Simply Wall St's Community page you can build or follow Narratives, which are clear stories behind the numbers that link your view of Hilltop Holdings' business, your forecasts for revenue, earnings and margins, and your fair value estimate. You can then compare that to the current price to help decide whether to buy or sell. Those Narratives update automatically when fresh news or earnings arrive. For example, one investor might back a fair value close to US$38.67 based on expectations of steadier earnings and share repurchases, while another might use more cautious assumptions and land well below that figure.

Do you think there's more to the story for Hilltop Holdings? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

Disclaimer:This article represents the opinion of the author only. It does not represent the opinion of Webull, nor should it be viewed as an indication that Webull either agrees with or confirms the truthfulness or accuracy of the information. It should not be considered as investment advice from Webull or anyone else, nor should it be used as the basis of any investment decision.