Home BancShares (NYSE:HOMB) and Preferred Bank (NASDAQ:PFBC) Head-To-Head Analysis

Preferred Bank (NASDAQ:PFBC – Get Free Report) and Home BancShares (NYSE:HOMB – Get Free Report) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, valuation, earnings and profitability.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Preferred Bank and Home BancShares, as provided by MarketBeat.

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Preferred Bank presently has a consensus price target of $106.25, suggesting a potential upside of 0.43%. Home BancShares has a consensus price target of $33.00, suggesting a potential upside of 14.42%. Given Home BancShares’ stronger consensus rating and higher probable upside, analysts plainly believe Home BancShares is more favorable than Preferred Bank.

Profitability

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

Risk & Volatility

Preferred Bank has a beta of 0.54, suggesting that its stock price is 46% less volatile than the S&P 500. Comparatively, Home BancShares has a beta of 0.67, suggesting that its stock price is 33% less volatile than the S&P 500.

Insider and Institutional Ownership

72.8% of Preferred Bank shares are owned by institutional investors. Comparatively, 67.3% of Home BancShares shares are owned by institutional investors. 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 stock is poised for long-term growth.

Earnings & Valuation

This table compares Preferred Bank and Home BancShares”s revenue, earnings per share and valuation.

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

Dividends

Preferred Bank pays an annual dividend of $3.20 per share and has a dividend yield of 3.0%. Home BancShares pays an annual dividend of $0.92 per share and has a dividend yield of 3.2%. Preferred Bank pays out 29.3% 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. Preferred Bank has raised its dividend for 5 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.

Summary

Home BancShares beats Preferred Bank on 13 of the 17 factors compared between the two stocks.

About Preferred Bank

(Get Free Report)

Preferred Bank provides various commercial banking products and services to small and mid-sized businesses and their owners, entrepreneurs, real estate developers and investors, professionals, and high net worth individuals. The company accepts checking, savings, and money market deposit accounts; fixed-rate and fixed maturity retail, and non-retail certificates of deposit; and individual retirement accounts. It also provides real estate mortgage loans that are secured by retail, industrial, office, special purpose, and residential single and multi-family properties; real estate construction loans; commercial loans comprising lines of credit for working capital, term loans for capital expenditures, and commercial and stand-by letters of credit; and small business administration loans. In addition, the company offers trade finance services, including commercial and export letters of credit, import lines of credit, documentary collections, international wire transfers, acceptances/trust receipt financing products, export financing, and bills purchase programs. Further, it provides cash management services; and internet, mobile, and tablet banking services. The company operates through full-service branch offices in the California counties of Los Angeles, Orange and San Francisco; Flushing, New York; Houston suburb of Sugar Land, Texas; and a satellite office in Manhattan, New York. The company was incorporated in 1991 and is headquartered in Los Angeles, California.

About Home BancShares

(Get Free Report)

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.

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