Definitive Analysis
Definitive Analysis

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HMN Financial, Inc. (HMNF)

Company Dividend Discount ModelIndustry: Banks - RegionalSector: Financial Services

Valuation Snapshot

Stable Growth$11.13 - $17.26$13.97
Multi-Stage$25.27 - $27.85$26.53
Blended Fair Value$20.25
Current Price$22.64
Upside-10.54%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2023202220212020201920182017201620152014
DPS0.00%0.00%0.300.240.000.000.000.000.000.000.000.00
YoY Growth--24.50%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%
Dividend Yield--1.42%1.24%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)5.24
(-) Cash Dividends Paid (M)1.48
(=) Cash Retained (M)3.76
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)1.050.650.39
Cash Retained (M)3.763.763.76
(-) Cash Required (M)-1.05-0.65-0.39
(=) Excess Retained (M)2.713.103.36
(/) Shares Outstanding (M)4.414.414.41
(=) Excess Retained per Share0.610.700.76
LTM Dividend per Share0.340.340.34
(+) Excess Retained per Share0.610.700.76
(=) Adjusted Dividend0.951.041.10
WACC / Discount Rate6.37%6.37%6.37%
Growth Rate-2.00%-1.00%0.00%
Fair Value$11.13$13.97$17.26
Upside / Downside-50.82%-38.29%-23.75%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)5.245.195.135.085.034.985.13
Payout Ratio28.27%40.62%52.96%65.31%77.65%90.00%92.50%
Projected Dividends (M)1.482.112.723.323.914.484.75

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate6.37%6.37%6.37%
Growth Rate-2.00%-1.00%0.00%
Year 1 PV (M)1.961.982.00
Year 2 PV (M)2.352.402.45
Year 3 PV (M)2.682.762.84
Year 4 PV (M)2.933.053.18
Year 5 PV (M)3.133.293.46
PV of Terminal Value (M)98.32103.44108.77
Equity Value (M)111.37116.93122.71
Shares Outstanding (M)4.414.414.41
Fair Value$25.27$26.53$27.85
Upside / Downside11.63%17.20%22.99%

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