First Hawaiian (FHB) has drawn investor attention after reporting first quarter results that included higher net interest income and net income year over year, along with share repurchases and a maintained quarterly cash dividend.

The recent first quarter earnings update, completed share repurchases and affirmed dividend appear to be contributing to price momentum, with a 12.56% 1-month share price return and a 23.92% 1-year total shareholder return from a US$27.16 share price.

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With shares at US$27.16, trading at only a small discount to the average analyst price target and with an estimated intrinsic value gap of about 36%, investors now have to ask: is First Hawaiian still undervalued, or is the market already pricing in future growth?

Most Popular Narrative: 60% Undervalued

With First Hawaiian last closing at $27.16 versus a narrative fair value of about $27.33, the widely followed model still sees a sizeable discount once future cash flows are brought back using a 6.98% discount rate.

The ongoing expansion in Hawaii's population and consistently rising tourism spending are supporting stable to growing demand for loans and banking services, which should lead to gradually increasing loan balances and higher fee-based revenue over time. Strategic investments and progress in digital banking adoption are enabling First Hawaiian to maintain expense discipline, streamline operations, and attract and retain younger customers, which will likely support margin improvement and cost-to-income ratio reduction.

Want to see what sits behind that fair value call? Revenue growth, margins and future earnings all play a role, but in a very specific combination. The narrative also leans on share count changes and a particular valuation multiple that is above the sector. Curious which assumptions really move the model and how sensitive fair value is to them.

Result: Fair Value of $27.33 (UNDERVALUED)

However, still keep an eye on deposit outflows and rising competition for construction loan takeouts, as either could pressure funding costs and long term earnings power.

Another View: Earnings Multiple Paints A Tighter Picture

The SWS fair value model points to a sizeable 35.9% discount at a fair value of $42.36. However, the current P/E of 11.6x is higher than the 10.6x fair ratio and above the 10x peer average. That gap suggests less room for error, so which signal would you trust more?

Next Steps

With sentiment mixed but rewards on the table, this is a good time to look through the numbers yourself and decide how convincing the story feels. Then check the 3 key rewards.

Looking for more investment ideas?

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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.