Financial Review: First Financial Bankshares (FFIN) and Heritage Financial Group (HBOS)

First Financial Bankshares (NASDAQ: FFIN) and Heritage Financial Group (NASDAQ:HBOS) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, profitability, analyst recommendations, institutional ownership and valuation.

Insider & Institutional Ownership

51.4% of First Financial Bankshares shares are held by institutional investors. 5.0% of First Financial Bankshares shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Profitability

This table compares First Financial Bankshares and Heritage Financial Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
First Financial Bankshares 33.51% 12.70% 1.60%
Heritage Financial Group 12.90% 9.62% 0.89%

Analyst Ratings

This is a breakdown of current recommendations and price targets for First Financial Bankshares and Heritage Financial Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Financial Bankshares 0 4 0 0 2.00
Heritage Financial Group 0 0 0 0 N/A

First Financial Bankshares currently has a consensus price target of $41.25, suggesting a potential downside of 9.44%. Given First Financial Bankshares’ higher possible upside, equities analysts plainly believe First Financial Bankshares is more favorable than Heritage Financial Group.

Valuation and Earnings

This table compares First Financial Bankshares and Heritage Financial Group’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
First Financial Bankshares $317.42 million 9.50 $104.77 million $1.67 27.28
Heritage Financial Group N/A N/A N/A $1.19 25.36

First Financial Bankshares has higher revenue and earnings than Heritage Financial Group. Heritage Financial Group is trading at a lower price-to-earnings ratio than First Financial Bankshares, indicating that it is currently the more affordable of the two stocks.

Dividends

First Financial Bankshares pays an annual dividend of $0.76 per share and has a dividend yield of 1.7%. Heritage Financial Group does not pay a dividend. First Financial Bankshares pays out 45.5% of its earnings in the form of a dividend.

Volatility & Risk

First Financial Bankshares has a beta of 1.4, meaning that its share price is 40% more volatile than the S&P 500. Comparatively, Heritage Financial Group has a beta of 0.66, meaning that its share price is 34% less volatile than the S&P 500.

Summary

First Financial Bankshares beats Heritage Financial Group on 10 of the 11 factors compared between the two stocks.

First Financial Bankshares Company Profile

First Financial Bankshares, Inc. is a financial holding company. The Company, through its subsidiaries, conducts commercial banking business. As of December 31, 2016, the Company’s subsidiaries included First Financial Bank, National Association, Abilene, Texas; First Technology Services, Inc., Abilene, Texas; First Financial Trust & Asset Management Company, National Association, Abilene, Texas; First Financial Investments, Inc., Abilene, Texas, and First Financial Insurance Agency, Inc., Abilene, Texas. Its banking centers are located in Central, North Central, Southeast and West Texas. Its loan portfolio consists of loans made to businesses, professionals, individuals, and farm and ranch operations located in the primary trade areas served by its subsidiary bank. Its securities available-for-sale include the United States Treasury securities, Obligations of the United States Government sponsored enterprises and agencies and Obligations of states and political subdivisions.

Heritage Financial Group Company Profile

Heritage Financial Group, Inc. (Heritage) is a bank holding company. Heritage conducts commercial banking, retail banking, mortgage banking and wealth management activities through its wholly owned subsidiary, HeritageBank of the South (the Bank). As of December 31, 2014, the Bank operated in Georgia, Florida and Alabama through 36 banking locations, 21 mortgage offices, and 5 investment offices. The Bank provides credit based products, deposit accounts, corporate cash management, investment support and other services to commercial and retail clients. As of December 31, 2014, the Company had total assets of $1.7 billion. The Company offers various types of loans, including, residential real estate loans; commercial real estate loans; construction and land loans; commercial and industrial loans, and consumer and other loans.

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