Veritex (VBTX) vs. HomeStreet (HMST) Head to Head Review

Veritex (NASDAQ: HMST) and HomeStreet (NASDAQ:HMST) are both small-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, profitability, institutional ownership, dividends, earnings, valuation and risk.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Veritex and HomeStreet, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Veritex 0 0 3 0 3.00
HomeStreet 0 4 1 0 2.20

Veritex currently has a consensus price target of $35.00, indicating a potential upside of 13.97%. HomeStreet has a consensus price target of $30.80, indicating a potential upside of 5.12%. Given Veritex’s stronger consensus rating and higher possible upside, equities analysts plainly believe Veritex is more favorable than HomeStreet.

Risk & Volatility

Veritex has a beta of 1.42, suggesting that its share price is 42% more volatile than the S&P 500. Comparatively, HomeStreet has a beta of 0.39, suggesting that its share price is 61% less volatile than the S&P 500.

Institutional & Insider Ownership

73.3% of Veritex shares are owned by institutional investors. Comparatively, 81.2% of HomeStreet shares are owned by institutional investors. 4.7% of Veritex shares are owned by insiders. Comparatively, 1.6% of HomeStreet shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Veritex and HomeStreet’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Veritex 23.09% 6.53% 1.09%
HomeStreet 11.40% 6.66% 0.67%

Valuation and Earnings

This table compares Veritex and HomeStreet’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Veritex $87.13 million 8.52 $15.15 million $0.95 32.33
HomeStreet $549.84 million 1.44 $68.94 million $1.68 17.44

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

Summary

Veritex beats HomeStreet on 9 of the 14 factors compared between the two stocks.

Veritex Company Profile

Veritex Holdings, Inc. operates as the holding company for Veritex Community Bank that provides various commercial banking products and services to small and medium-sized businesses, and professionals. The company's deposit products include checking, demand, savings, money market, and time deposit accounts, as well as commercial deposit and financial institution money market accounts. Its loan portfolio consists of commercial real estate and general commercial loans, residential real estate loans, construction and land loans, farmland loans, and consumer loans. The company also provides a range of online banking solutions, such as access to account balances, online transfers, online bill payment and electronic delivery of customer statements, and ATMs, as well as banking through telephone, mail, and personal appointment. In addition, it offers debit cards, night depository services, direct deposits, cashier's checks, and letters of credit; treasury management services, including balance reporting, transfers between accounts, wire transfer initiation, automated clearinghouse origination, and stop payments; and cash management deposit products consisting of lockbox, remote deposit capture, positive pay, reverse positive pay, account reconciliation services, zero balance accounts, and sweep accounts. The company operates through 20 branches and 1 mortgage office located in the Dallas-Fort Worth metroplex, as well as 1 branch in the Houston metropolitan area. Veritex Holdings, Inc. was founded in 2009 and is headquartered in Dallas, Texas.

HomeStreet Company Profile

HomeStreet, Inc., together with its subsidiaries, provides various financial services primarily in the Pacific Northwest, California, and Hawaii. The company operates in two segments, Commercial and Consumer Banking, and Mortgage Banking. The Commercial and Consumer Banking segment offers deposit products; non-deposit investment products; and insurance products and cash management services. It also originates consumer loans, single family residential mortgages, loans secured by commercial real estate, construction loans for residential and commercial real estate projects, commercial business loans, and agricultural loans; and bridge loans and permanent loans primarily on single family residences, as well as on office, retail, industrial, and multifamily property types. This segment provides its products and services through bank branches, lending centers, and ATMs, as well as through online, mobile, and telephone banking. The Mortgage Banking segment originates and purchases single family residential mortgage loans for sale in the secondary market. This segment is also involved in the sale of loans on a servicing-released and servicing-retained basis to securitizers and correspondent lenders. The company also offers insurance products and services for consumers. As of December 31, 2017, it had a network of 59 retail deposit branches located in Washington state, Southern California, Portland, Oregon, and Hawaii; and 44 primary stand-alone home loan centers and 6 primary commercial lending centers. The company was formerly known as Continental Mortgage and Loan Company. HomeStreet, Inc. was founded in 1921 and is headquartered in Seattle, Washington.

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