Analysts See Huntington Bancshares as Deeply Undervalued, But Market Sentiment Weighs on Regional Banks

COLUMBUS, Ohio — While Huntington Bancshares Incorporated (NASDAQ: HBAN) has delivered a steady 7.8% return to shareholders over the past year, a deeper financial analysis indicates the market may be significantly undervaluing the regional bank's potential. Closing at $17.48 recently, the stock appears cheap against a backdrop of robust underlying metrics, according to valuation models that assess a bank's ability to generate profits above shareholder cost.

The core of the analysis hinges on the Excess Returns Model, which capitalizes profits a bank earns above its cost of equity. For Huntington, with a book value of $13.78 per share and a solid average return on equity of 12.27%, the model—using consensus analyst estimates for stable EPS and book value—calculates an intrinsic value of approximately $34.28 per share. This implies the stock is currently trading at a staggering 49% discount to its estimated fair value.

"The disconnect between the model's output and the market price is pronounced," noted a financial analyst familiar with the methodology. "It suggests investors are either pricing in significant headwinds not captured in the stable estimates or are applying a blanket discount to the entire regional banking sector."

This sector-wide caution has been a dominant theme since the 2023 banking turmoil, with investors reassessing balance sheet strength and deposit stability. Huntington's current price-to-earnings (P/E) ratio of 13.13x, while roughly in line with its direct peer average, sits below a proprietary "Fair Ratio" of 16.12x that accounts for the company's specific earnings profile and risk factors.

Beyond standard metrics, platforms like Simply Wall St are promoting "Narratives"—user-generated valuation stories where investors input their own assumptions on future revenue and margins to derive a personal fair value. This tool highlights the spectrum of opinions, from bullish views banking on Huntington's stable returns to more cautious outlooks concerned with funding costs and credit quality.

Investor Reactions: A Mix of Conviction and Skepticism

We gathered reactions from several investors to gauge the street's sentiment:

• Michael R., Portfolio Manager (Chicago): "The quantitative case is compelling. A near-50% margin of safety is hard to ignore for a bank with Huntington's footprint and profitability. This looks like a classic case of market myopia towards regional banks."
• Sarah Chen, Retail Investor (Austin): "I've been using the Narrative feature to stress-test my own assumptions. It's helpful to see how sensitive the fair value is to changes in net interest margin. My model still shows about a 30% upside, which is enough for me to hold."
• David Forsythe, Independent Analyst (Blog: 'The Contrarian Ledger'): "This is pure spreadsheet fantasy. These models are backward-looking and assume the rosy analyst estimates are gospel. They completely ignore the looming commercial real estate risks on the books of every regional bank, including Huntington. The market isn't 'undervaluing' it; it's rationally pricing in the storm clouds everyone else is pretending not to see."
• Lisa G., Retirement Planner (Florida): "For my clients seeking income and stability, Huntington's valuation is attractive relative to its dividend history. The analysis confirms it's not overpriced, and the potential upside is a bonus. We're adding on dips."

Disclosure: This analysis is based on historical data and analyst forecasts using a standardized methodology. It is not financial advice and does not constitute a recommendation to buy or sell any security. Simply Wall St holds no position in the mentioned stocks.