First Business Financial Services (NASDAQ:FBIZ) & Home BancShares (NYSE:HOMB) Head-To-Head Analysis

First Business Financial Services (NASDAQ:FBIZ) 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 risk, valuation, analyst recommendations, institutional ownership, earnings, dividends and profitability.

Analyst Ratings

This is a summary of current ratings and recommmendations for First Business Financial Services and Home BancShares, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Business Financial Services	0	0	4	1	3.20
Home BancShares	0	5	5	0	2.50

First Business Financial Services presently has a consensus price target of $78.25, indicating a potential upside of 10.37%. Home BancShares has a consensus price target of $32.57, indicating a potential upside of 10.99%. Given Home BancShares’ higher possible upside, analysts clearly believe Home BancShares is more favorable than First Business Financial Services.

Earnings & Valuation

This table compares First Business Financial Services and Home BancShares”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Business Financial Services	$279.25 million	2.13	$50.32 million	$6.56	10.81
Home BancShares	$1.12 billion	5.25	$475.44 million	$2.44	12.03

Home BancShares has higher revenue and earnings than First Business Financial Services. First Business Financial Services 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 & Insider Ownership

60.1% of First Business Financial Services shares are held by institutional investors. Comparatively, 67.3% of Home BancShares shares are held by institutional investors. 5.0% of First Business Financial Services shares are held by insiders. Comparatively, 6.4% of Home BancShares shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

First Business Financial Services pays an annual dividend of $1.36 per share and has a dividend yield of 1.9%. Home BancShares pays an annual dividend of $0.92 per share and has a dividend yield of 3.1%. First Business Financial Services pays out 20.7% of its earnings in the form of a dividend. Home BancShares pays out 37.7% 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. First Business Financial Services has raised its dividend for 13 consecutive years and Home BancShares has raised 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.

Profitability

This table compares First Business Financial Services and Home BancShares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Business Financial Services	19.28%	14.92%	1.29%
Home BancShares	32.36%	11.14%	2.08%

Risk and Volatility

First Business Financial Services has a beta of 0.67, indicating that its share price is 33% less volatile than the S&P 500. Comparatively, Home BancShares has a beta of 0.72, indicating that its share price is 28% less volatile than the S&P 500.

Summary

Home BancShares beats First Business Financial Services on 13 of the 18 factors compared between the two stocks.

About First Business Financial Services

First Business Financial Services, Inc. operates as the bank holding company for First Business Bank that provides commercial banking products and services for small and medium-sized businesses, business owners, executives, professionals, and high net worth individuals in Wisconsin, Kansas, and Missouri. The company offers real estate lending, commercial and industrial lending, asset-based lending, accounts receivable financing, equipment financing loans and leases, floorplan financing, vendor financing, small business administration lending and servicing, treasury management solutions, and company retirement services. It also provides private wealth management for individuals, including creating and executing asset allocation strategies, trust and estate administration, financial planning, investment management, and access to brokerage and custody-only services. In addition, the company offers bank consulting consisting of investment portfolio administrative and asset liability management services, and commercial deposit accounts. The company was founded in 1909 and is headquartered in Madison, Wisconsin.

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.