Critical Review: Simmons First National (NASDAQ:SFNC) versus Hilltop (NYSE:HTH)

Simmons First National (NASDAQ:SFNC) and Hilltop (NYSE:HTH) are both mid-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, valuation, risk, analyst recommendations, institutional ownership, earnings and profitability.

Volatility & Risk

Simmons First National has a beta of 0.97, indicating that its stock price is 3% less volatile than the S&P 500. Comparatively, Hilltop has a beta of 0.91, indicating that its stock price is 9% less volatile than the S&P 500.

Earnings and Valuation

This table compares Simmons First National and Hilltop”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Simmons First National	$50.15 million	50.90	$152.69 million	($2.93)	-6.02
Hilltop	$1.19 billion	1.71	$113.21 million	$2.51	13.18

Simmons First National has higher earnings, but lower revenue than Hilltop. Simmons First National 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 price targets for Simmons First National and Hilltop, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Simmons First National	1	4	2	0	2.14
Hilltop	0	3	1	1	2.60

Simmons First National presently has a consensus price target of $22.33, indicating a potential upside of 26.61%. Hilltop has a consensus price target of $34.00, indicating a potential upside of 2.79%. Given Simmons First National’s higher probable upside, research analysts clearly believe Simmons First National is more favorable than Hilltop.

Profitability

This table compares Simmons First National and Hilltop’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Simmons First National	-29.70%	5.84%	0.78%
Hilltop	9.86%	7.18%	1.01%

Dividends

Simmons First National pays an annual dividend of $0.85 per share and has a dividend yield of 4.8%. Hilltop pays an annual dividend of $0.72 per share and has a dividend yield of 2.2%. Simmons First National pays out -29.0% of its earnings in the form of a dividend. Hilltop pays out 28.7% 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. Simmons First National has raised its dividend for 14 consecutive years and Hilltop has raised its dividend for 8 consecutive years. Simmons First National is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

27.6% of Simmons First National shares are held by institutional investors. Comparatively, 57.1% of Hilltop shares are held by institutional investors. 1.4% of Simmons First National shares are held by company insiders. Comparatively, 29.9% of Hilltop shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

Hilltop beats Simmons First National on 10 of the 18 factors compared between the two stocks.

About Simmons First National

Simmons First National Corporation operates as the holding company for Simmons Bank that provides banking and other financial products and services to individuals and businesses. The company offers checking, savings, and time deposits; consumer, real estate, and commercial loans; agricultural finance, equipment, and small business administration lending; trust and fiduciary services; credit cards; investment management products; treasury management; insurance products; and securities and investment services. It also provides ATM services; Internet and mobile banking platforms; overdraft facilities; and safe deposit boxes. The company was founded in 1903 and is headquartered in Pine Bluff, Arkansas.

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.