Hilltop (NYSE:HTH) and Associated Banc (NYSE:ASB) Critical Survey

Associated Banc (NYSE:ASB) and Hilltop (NYSE:HTH) are both mid-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, valuation, earnings, profitability, analyst recommendations, dividends and institutional ownership.

Earnings & Valuation

This table compares Associated Banc and Hilltop”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Associated Banc	$2.46 billion	2.36	$474.78 million	$2.86	10.77
Hilltop	$1.63 billion	1.36	$165.59 million	$2.70	14.24

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

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Associated Banc and Hilltop, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Associated Banc	0	6	5	1	2.58
Hilltop	0	3	1	1	2.60

Associated Banc presently has a consensus target price of $32.00, indicating a potential upside of 3.92%. Hilltop has a consensus target price of $40.00, indicating a potential upside of 4.02%. Given Hilltop’s stronger consensus rating and higher possible upside, analysts clearly believe Hilltop is more favorable than Associated Banc.

Dividends

Associated Banc pays an annual dividend of $0.96 per share and has a dividend yield of 3.1%. Hilltop pays an annual dividend of $0.88 per share and has a dividend yield of 2.3%. Associated Banc pays out 33.6% of its earnings in the form of a dividend. Hilltop pays out 32.6% 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. Associated Banc has raised its dividend for 13 consecutive years and Hilltop has raised its dividend for 8 consecutive years. Associated Banc is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Associated Banc and Hilltop’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Associated Banc	19.66%	10.64%	1.12%
Hilltop	10.17%	7.40%	1.02%

Volatility and Risk

Associated Banc has a beta of 0.77, indicating that its stock price is 23% less volatile than the S&P 500. Comparatively, Hilltop has a beta of 0.89, indicating that its stock price is 11% less volatile than the S&P 500.

Insider and Institutional Ownership

83.0% of Associated Banc shares are held by institutional investors. Comparatively, 57.1% of Hilltop shares are held by institutional investors. 0.7% of Associated Banc shares are held by company insiders. Comparatively, 5.4% of Hilltop shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Associated Banc beats Hilltop on 11 of the 17 factors compared between the two stocks.

About Associated Banc

Associated Banc-Corp, a bank holding company, provides various banking and nonbanking products to individuals and businesses in Wisconsin, Illinois, and Minnesota. The company offers lending solutions, including commercial loans and lines of credit, commercial real estate financing, construction loans, letters of credit, leasing, asset based lending and equipment finance, loan syndications products, residential mortgages, home equity loans and lines of credit, personal and installment loans, auto finance and business loans, and business lines of credit. It also provides deposit and cash management solutions, such as commercial checking and interest-bearing deposit products, cash vault and night depository services, liquidity solutions, payables and receivables solutions, and information services; specialized financial services, such as interest rate risk management and foreign exchange solutions; fiduciary services, such as administration of pension, profit-sharing and other employee benefit plans, fiduciary and corporate agency services, and institutional asset management services; and investable funds solutions, including savings, money market deposit accounts, IRA accounts, CDs, fixed and variable annuities, full-service, discount, and online investment brokerage; investment advisory services; and trust and investment management accounts. In addition, the company offers deposit and transactional solutions, including checking, credit, debit and pre-paid cards, online banking and bill pay; and money transfer services. Associated Banc-Corp was founded in 1861 and is headquartered in Green Bay, Wisconsin.

About Hilltop

Hilltop Holdings Inc. provides business and consumer banking services. It operates through three segments: Banking, Broker-Dealer, and Mortgage Origination. The Banking segment offers savings, checking, interest-bearing checking, and money market accounts; certificates of deposit; lines and letters of credit, home improvement and equity loans, loans for purchasing and carrying securities, term, agricultural and commercial real estate, equipment loans, and other lending products; and mortgage, commercial and industrial loans, and term and construction finance. It also provides treasury management, asset management, check cards, safe deposit boxes, online banking, bill pay, and overdraft privilege services; and estate planning, management and administration, investment portfolio management, employee benefit accounts, and individual retirement accounts services, as well as automated teller machines. The Broker-Dealer segment offers public finance services that assist public entities in originating, syndicating, and distributing securities of municipalities and political subdivisions; specialized advisory and investment banking services; advice and guidance to arbitrage rebate compliance, portfolio management, and local government investment pool administration; advisory services and products for derivatives and commodities; agricultural insurance; and sells, trades in, and underwrites U.S. government and government agency bonds, corporate bonds, and municipal bonds; mortgage-backed, asset-backed, and commercial mortgage-backed securities and structured products; and provides asset and liability management advisory, clearing, retail, and securities lending services. The Mortgage Origination segment offers fixed and adjustable rate mortgages, jumbo, new construction, Federal Housing Administration, Veterans Affairs, and United States Department of Agriculture loans. Hilltop Holdings Inc. was incorporated in 1998 and is based in Dallas, Texas.