Prosperity Bancshares (NYSE:PB) versus Home BancShares (NYSE:HOMB) Head to Head Review

Prosperity Bancshares (NYSE:PB) and Home BancShares (NYSE:HOMB) are both mid-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their risk, valuation, dividends, analyst recommendations, profitability, institutional ownership and earnings.

Dividends

Prosperity Bancshares pays an annual dividend of $2.40 per share and has a dividend yield of 3.6%. Home BancShares pays an annual dividend of $0.92 per share and has a dividend yield of 3.2%. Prosperity Bancshares pays out 41.6% of its earnings in the form of a dividend. Home BancShares pays out 38.0% 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. Prosperity Bancshares has raised its dividend for 27 consecutive years and Home BancShares has raised its dividend for 15 consecutive years. Prosperity Bancshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Prosperity Bancshares and Home BancShares, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Prosperity Bancshares	2	7	5	0	2.21
Home BancShares	0	4	5	0	2.56

Prosperity Bancshares presently has a consensus price target of $78.27, indicating a potential upside of 16.15%. Home BancShares has a consensus price target of $33.00, indicating a potential upside of 15.12%. Given Prosperity Bancshares’ higher possible upside, research analysts clearly believe Prosperity Bancshares is more favorable than Home BancShares.

Volatility & Risk

Prosperity Bancshares has a beta of 0.66, meaning that its stock price is 34% less volatile than the S&P 500. Comparatively, Home BancShares has a beta of 0.72, meaning that its stock price is 28% less volatile than the S&P 500.

Earnings & Valuation

This table compares Prosperity Bancshares and Home BancShares”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Prosperity Bancshares	$1.74 billion	3.91	$542.84 million	$5.77	11.68
Home BancShares	$1.48 billion	3.88	$475.44 million	$2.42	11.85

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

Institutional and Insider Ownership

80.7% of Prosperity Bancshares shares are owned by institutional investors. Comparatively, 67.3% of Home BancShares shares are owned by institutional investors. 4.0% of Prosperity Bancshares shares are owned by company insiders. Comparatively, 6.4% of Home BancShares shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Prosperity Bancshares	29.95%	7.39%	1.43%
Home BancShares	32.10%	11.12%	2.07%

About Prosperity Bancshares

Prosperity Bancshares, Inc. operates as bank holding company for the Prosperity Bank that provides financial products and services to businesses and consumers. It accepts various deposit products, such as demand, savings, money market, and time accounts, as well as and certificates of deposit. The company also offers 1-4 family residential mortgage, commercial real estate and multifamily residential, commercial and industrial, agricultural, and non-real estate agricultural loans, as well as construction, land development, and other land loans; consumer loans, including automobile, recreational vehicle, boat, home improvement, personal, and deposit account collateralized loans; term loans and lines of credit; and consumer durables and home equity loans, as well as loans for working capital, business expansion, and purchase of equipment and machinery. In addition, it provides internet banking, mobile banking, trust and wealth management, retail brokerage, mortgage services, and treasury management, as well as debit and credit cards. The company was incorporated in 1983 and is headquartered in Houston, Texas.

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.