Assessing HSBC Shares After Hacking Attempt and Strong 2025 Price Gains

If you are looking for a stock that has both grabbed headlines and made some serious moves, HSBC Holdings may already be on your radar. Like so many investors, you could be asking yourself: Is this the moment to buy in, or should you take some profits off the table after such a rapid climb? The past five years have seen HSBC’s share price rocket up by an astonishing 338.6%, with gains of 158.5% over three years and 55.6% in the last twelve months alone. Even after a strong start this year, up 26.2% year-to-date, there has been a bit of turbulence lately, with the shares down 7.3% over the past week and 2.4% in the last month.

HSBC’s position both globally and in local markets remains under the microscope. Recent news has added complexity to the outlook. Just days ago, the company confirmed that its Brazilian operations were targeted in a hacking attempt, reminding investors that risks can appear from unexpected directions. Add to that big questions about HSBC’s leadership succession and its efforts to bring senior leaders back to the office to "set the tone from the top," and you can see why market sentiment seems a bit unsettled.

So, with all these ups and downs, what does HSBC’s valuation actually look like right now? Standard valuation checks suggest that the company is undervalued in just 2 out of 6 categories, resulting in a value score of 2. We will break down what that really means for long-term investors using common valuation approaches, and then explore an even deeper way to think about the true worth of HSBC shares.

HSBC Holdings scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: HSBC Holdings Excess Returns Analysis

The Excess Returns Model is a valuation approach that goes beyond simple earnings by measuring how much value a company creates for shareholders over and above the expected cost of equity. Put simply, it asks: does HSBC earn enough on its investments to justify the risks shareholders are taking?

For HSBC Holdings, the key inputs are as follows:

• Book Value: £9.88 per share
• Stable EPS: £1.48 per share (Source: Weighted future Return on Equity estimates from 17 analysts.)
• Cost of Equity: £0.91 per share
• Excess Return: £0.57 per share
• Average Return on Equity: 13.66%
• Stable Book Value: £10.81 per share (Source: Weighted future Book Value estimates from 8 analysts.)

With these numbers, the Excess Returns Model estimates that HSBC is generating reliable value above its cost of capital, even as book value and earnings are projected to remain stable. Importantly, this approach implies the intrinsic value of HSBC’s stock is 36.6% higher than its current market price, signaling that the shares are significantly undervalued at the moment.

Result: UNDERVALUED

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

Our Excess Returns analysis suggests HSBC Holdings is undervalued by 36.6%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: HSBC Holdings Price vs Earnings

For profitable companies like HSBC Holdings, the Price-to-Earnings (PE) ratio offers a popular and straightforward way to gauge valuation. It tells investors how much they are paying for each unit of earnings, making it a go-to metric for comparing stocks with consistent profits. Growth expectations and risk play a large role in what PE ratio is considered "normal." Faster-growing or less risky banks can justify higher multiples, while slower growth or more perceived risk could result in lower fair values.

Currently, HSBC trades at a PE ratio of 12.8x. To put this in context, the average PE ratio for UK banks is about 10.3x, while its closest peers trade around 10.0x. This means HSBC is priced at a premium to both its industry and peer group. However, Simply Wall St’s "Fair Ratio" for HSBC is 9.3x, which factors in the company’s specific earnings growth outlook, profit margin, market capitalization, and relevant risks. Instead of relying solely on broad industry and peer multiples, the Fair Ratio provides a more tailored benchmark for this particular company’s position in the market.

When comparing HSBC’s current PE of 12.8x to its Fair Ratio of 9.3x, it appears the shares are trading above the level justified by the company’s fundamentals and risk profile. In other words, HSBC may be somewhat expensive on an earnings basis after its recent run-up.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your HSBC Holdings Narrative

Earlier we mentioned that there’s an even better way to understand valuation. Let’s introduce you to Narratives: these are clear, easy-to-follow stories that investors create to explain what they believe about a company’s future. Narratives combine real data and forecasts to back up an investor’s view of what HSBC Holdings is truly worth.

A Narrative ties together your perspective on HSBC’s business. In other words, it shows why you think the company will grow or face challenges, along with specific financial estimates like future revenues, earnings, and profit margins, to arrive at your own fair value for the shares. On Simply Wall St’s platform, within the Community page that is used by millions worldwide, anyone can build and publish a Narrative. This makes it simple for new and experienced investors alike to make more informed decisions.

With Narratives, you can quickly see if your story leads to a fair value above or below the current price, helping you decide on your next steps. These Narratives update automatically whenever important news or earnings come out, ensuring your view stays current and relevant.

For example, some investors believe HSBC’s focus on Asian wealth management and digital transformation will fuel faster growth, leading them to post price targets as high as £11.29. Others are concerned about risks in Asian markets and set more conservative targets around £7.93. By crafting your own Narrative, you put the numbers in your context to support your decision making.

Do you think there's more to the story for HSBC Holdings? Create your own Narrative to let the Community know!

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.

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