Should You Reconsider Bank of Hawaii After Regional Banks Rally in Early 2025?

If you have been eyeing Bank of Hawaii and wondering whether now is the right time to make a move, you are not alone. Investors have watched the bank’s shares take a bit of a rollercoaster ride lately. Over the past twelve months, Bank of Hawaii managed to climb 8.2%, despite a bumpy shorter-term path, with shares dipping slightly by 0.4% over the last week and down 4.3% in the past month. Zooming out even further, the five-year return sits at an impressive 47.7%, showing there is longer-term potential here even as the stock weathered some turbulence in recent years with a negative 1.1% return over three years.

Much of this movement reflects changing market sentiment around regionally focused banks as investors weigh economic conditions, shifts in interest rates, and the sector’s overall risk profile. While Bank of Hawaii has not been at the epicenter of major headlines lately, the sector has seen bouts of caution and optimism as the outlook on inflation and local economies evolves, affecting how investors treat stocks like this one.

But what about value? On a score measuring six different checks for undervaluation, Bank of Hawaii lands a 2. That means only two checks suggest the stock is undervalued right now. So, is it a hidden gem or closer to fairly priced? Let’s break down what those valuation measures really mean, and then look at an even more effective way to evaluate the company’s true worth before you make your next move.

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

Approach 1: Bank of Hawaii Excess Returns Analysis

The Excess Returns model examines how efficiently a company generates profit from its equity, above the minimum return investors would expect. For Bank of Hawaii, this approach focuses on whether the bank is generating value beyond its cost of equity and how sustainable those returns may be in the coming years.

According to this model, Bank of Hawaii has a Book Value of $35.16 per share and is expected to maintain a Stable EPS of $5.05 per share, based on weighted future Return on Equity estimates from five analysts. The bank’s Cost of Equity is estimated at $2.65 per share, meaning actual returns exceed the required rate by $2.40 per share. The average Return on Equity is 12.92 percent, and analysts expect the Stable Book Value to rise to $39.12 per share in the future.

This efficient use of capital leads to an Excess Returns-based intrinsic value of $104.15 per share. Comparing that number to where the stock is currently trading shows a substantial 37.2 percent discount, suggesting the shares are notably undervalued using this methodology.

Result: UNDERVALUED

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

Our Excess Returns analysis suggests Bank of Hawaii is undervalued by 37.2%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Bank of Hawaii Price vs Earnings

For profitable banks like Bank of Hawaii, the Price-to-Earnings (PE) ratio is a widely used way to gauge valuation. It provides a snapshot of how much investors are willing to pay for one dollar of the company’s earnings, making it especially useful for comparing established companies with consistent profits.

However, what counts as a “fair” PE ratio depends on factors like expected growth and risk. Companies with higher earnings growth potential or lower risk profiles often command higher PE ratios. Slower-growing or riskier firms tend to trade at a lower multiple.

Currently, Bank of Hawaii trades at a PE of 17.1x. This is noticeably above the industry average of 11.7x and also higher than the average of its direct peers at 14.0x. On the surface, this could make the stock seem a bit expensive compared to others in the sector.

This is where Simply Wall St’s Fair Ratio comes in. The Fair Ratio is a proprietary metric designed to estimate what multiple is genuinely justified for a company by considering its growth outlook, profit margins, risk profile, industry norms, and even company size. This holistic view is considered more robust than a simple peer or industry comparison, as it reflects the unique characteristics of Bank of Hawaii.

The Fair Ratio for Bank of Hawaii is calculated at 13.6x. Comparing this to the current PE of 17.1x suggests that the stock is trading above what is considered fair value based on its specific fundamentals and outlook.

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 Bank of Hawaii Narrative

Earlier we mentioned that there's an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is simply your story behind the numbers, where you outline what you believe about a company, including its future prospects, risks, and strengths, alongside your own estimates for future revenue, earnings, profit margins, and what you think is a fair value.

Narratives bridge the gap between financial forecasts and a company’s real-world story, helping you link your reasoning with specific numbers and see how that impacts valuation. On Simply Wall St’s Community page, you can easily explore and create Narratives, a tool used by millions of investors, which means you get to visualize how your perspective leads to a buy or sell decision by comparing your Fair Value to the current share price.

What’s more, Narratives update dynamically whenever new data arrives, so your view stays relevant as news, results, or other information emerge. For example, one investor might see Bank of Hawaii’s strong local position and wealth trends and set a Fair Value of $70.50 per share, while another may focus on concentration risks and assign a much lower value, empowering both to confidently act on their outlook.

Do you think there's more to the story for Bank of Hawaii? 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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