Analyzing Home BancShares (NYSE:HOMB) and Home Bancorp (NASDAQ:HBCP)

Home Bancorp (NASDAQ:HBCP) and Home BancShares (NYSE:HOMB) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, valuation, risk, profitability, earnings and analyst recommendations.

Institutional and Insider Ownership

49.4% of Home Bancorp shares are held by institutional investors. Comparatively, 67.3% of Home BancShares shares are held by institutional investors. 7.9% of Home Bancorp shares are held by insiders. Comparatively, 6.4% of Home BancShares shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Home Bancorp pays an annual dividend of $1.24 per share and has a dividend yield of 2.0%. Home BancShares pays an annual dividend of $0.84 per share and has a dividend yield of 3.1%. Home Bancorp pays out 21.1% of its earnings in the form of a dividend. Home BancShares pays out 34.9% 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 Bancorp has increased its dividend for 10 consecutive years and Home BancShares has increased its dividend for 15 consecutive years. Home BancShares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Home Bancorp has a beta of 0.53, suggesting that its share price is 47% less volatile than the S&P 500. Comparatively, Home BancShares has a beta of 0.75, suggesting that its share price is 25% less volatile than the S&P 500.

Profitability

This table compares Home Bancorp and Home BancShares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Home Bancorp	22.01%	11.03%	1.32%
Home BancShares	32.18%	11.16%	2.03%

Earnings and Valuation

This table compares Home Bancorp and Home BancShares”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Home Bancorp	$209.23 million	2.30	$46.06 million	$5.87	10.46
Home BancShares	$1.48 billion	3.62	$475.44 million	$2.41	11.28

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

Analyst Recommendations

This is a breakdown of current ratings for Home Bancorp and Home BancShares, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Home Bancorp	0	2	3	0	2.60
Home BancShares	0	4	3	0	2.43

Home Bancorp currently has a consensus target price of $63.00, indicating a potential upside of 2.62%. Home BancShares has a consensus target price of $32.40, indicating a potential upside of 19.14%. Given Home BancShares’ higher probable upside, analysts plainly believe Home BancShares is more favorable than Home Bancorp.

Summary

Home BancShares beats Home Bancorp on 12 of the 16 factors compared between the two stocks.

About Home Bancorp

Home Bancorp, Inc. operates as the bank holding company for Home Bank, National Association that provides various banking products and services in Louisiana, Mississippi, and Texas. It offers deposit products, including interest-bearing and noninterest-bearing checking, money market, savings, NOW, and certificates of deposit accounts. The company also provides various loan products comprising one-to four-family first mortgage loans, home equity loans and lines, commercial real estate loans, construction and land loans, multi-family residential loans, commercial and industrial loans, and consumer loans. In addition, it invests in securities; and offers credit cards and online banking services. Home Bancorp, Inc. was founded in 1908 and is headquartered in Lafayette, Louisiana.

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.