Is HSBC Holdings PLC ADR (HSBC) overvalued?
On Equity Rank's model estimate, HSBC trades close to its fair value (0% below it). HSBC Holdings PLC ADR (HSBC) last closed at $87.06; the multi-method model fair value is $87.34.
| Price | Model fair value | Price vs model |
|---|---|---|
| $87.06 | $87.34 | 0% below |
What the answer rests on
- 6 of 12 valuation methods put HSBC's value above its price and 6 put it below, so the methods disagree.
- To justify today's price, HSBC's free cash flow would need to grow about -3.6% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 4.5% a year.
- HSBC trades at 11.7 times its last year's earnings, against a median of 12.2 for 253 profitable Banks companies.
- Over the past year the price sat below the model fair value on 0% of trading days. The gap ranged from 1% above to 30% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind HSBC's fair value · What prices assume · Other companies