Contrasting United Community Banks (NYSE:UCB) & Home BancShares (NYSE:HOMB)

Home BancShares (NYSE:HOMB) and United Community Banks (NYSE:UCB) are both mid-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, institutional ownership, valuation, dividends, analyst recommendations, earnings and profitability.

Valuation and Earnings

This table compares Home BancShares and United Community Banks”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Home BancShares	$1.08 billion	4.76	$475.44 million	$2.41	10.84
United Community Banks	$1.54 billion	2.33	$328.10 million	$2.61	11.47

Home BancShares has higher earnings, but lower revenue than United Community Banks. Home BancShares is trading at a lower price-to-earnings ratio than United Community Banks, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Home BancShares has a beta of 0.78, meaning that its stock price is 22% less volatile than the S&P 500. Comparatively, United Community Banks has a beta of 0.84, meaning that its stock price is 16% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Home BancShares and United Community Banks, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Home BancShares	0	4	3	0	2.43
United Community Banks	0	4	3	0	2.43

Home BancShares currently has a consensus target price of $32.40, indicating a potential upside of 24.07%. United Community Banks has a consensus target price of $38.00, indicating a potential upside of 26.99%. Given United Community Banks’ higher possible upside, analysts clearly believe United Community Banks is more favorable than Home BancShares.

Profitability

This table compares Home BancShares and United Community Banks’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Home BancShares	32.18%	11.16%	2.03%
United Community Banks	21.35%	9.49%	1.20%

Insider and Institutional Ownership

67.3% of Home BancShares shares are held by institutional investors. Comparatively, 82.3% of United Community Banks shares are held by institutional investors. 6.4% of Home BancShares shares are held by company insiders. Comparatively, 0.4% of United Community Banks shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

Home BancShares pays an annual dividend of $0.84 per share and has a dividend yield of 3.2%. United Community Banks pays an annual dividend of $1.00 per share and has a dividend yield of 3.3%. Home BancShares pays out 34.9% of its earnings in the form of a dividend. United Community Banks pays out 38.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Home BancShares has increased its dividend for 15 consecutive years.

Summary

Home BancShares beats United Community Banks on 8 of the 15 factors compared between the two stocks.

About Home BancShares

Home Bancshares, Inc. (Conway, AR) operates as the bank holding company for Centennial Bank that provides commercial and retail banking, and related financial services to businesses, real estate developers and investors, individuals, and municipalities. Its deposit products include checking, savings, and money market accounts, as well as certificates of deposit. The company's loan portfolio comprises non-farm/non-residential real estate, construction/land development, residential mortgage, consumer, agricultural, and commercial and industrial loans. It provides internet banking, mobile banking and voice response information, cash management, overdraft protection, direct deposit, and automatic account transfer services, as well as safe deposit boxes and the United States savings bonds. In addition, the company writes policies for commercial and personal lines of business, including insurance for property, casualty, life, health, and employee benefits. It operates through branches in Arkansas, Florida, Alabama, Texas, and New York City. Home Bancshares, Inc. (Conway, AR) was founded in 1998 and is headquartered in Conway, Arkansas.

About United Community Banks

United Community Banks, Inc. operates as the financial holding company for United Community Bank that provides financial products and services to commercial, retail, government, education, energy, health care, and real estate sectors. The company accepts various deposit products, including checking, savings, money market, and other deposit accounts. It also offers lending services, including real estate, consumer, and commercial loans, to individuals, small businesses, mid-sized commercial businesses, and non-profit organizations, as well as secured and unsecured, and mortgage loans. In addition, the company originate loans partially guaranteed by the SBA and USDA loan programs. Further, it provides wealth management services comprising financial planning, customized portfolio management, and investment advice; trust services to manage fiduciary assets; non-deposit investment products; and insurance products, including life insurance, long-term care insurance, and tax-deferred annuities, as well as invests in residential and commercial mortgage-backed securities, asset-backed securities, the U.S. treasury, the U.S. agency, and municipal obligations. Additionally, the company offers reinsurance on a property insurance contract; insurance agency services; brokerage services; and payment processing, merchant, wire transfer, private banking, and other related financial services. It operates through a network of 171 branches in Florida, Georgia, North Carolina, South Carolina, and Tennessee. United Community Banks, Inc. was founded in 1950 and is headquartered in Blairsville, Georgia.