Simmons First National (NASDAQ:SFNC) and CBTX (NASDAQ:CBTX) Critical Contrast

CBTX (NASDAQ:CBTX) and Simmons First National (NASDAQ:SFNC) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, earnings, analyst recommendations, valuation, institutional ownership, dividends and risk.

Analyst Recommendations

This is a breakdown of recent recommendations for CBTX and Simmons First National, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CBTX 0 2 0 0 2.00
Simmons First National 0 2 2 0 2.50

CBTX currently has a consensus target price of $35.00, indicating a potential upside of 27.32%. Simmons First National has a consensus target price of $30.00, indicating a potential upside of 34.05%. Given Simmons First National’s stronger consensus rating and higher possible upside, analysts plainly believe Simmons First National is more favorable than CBTX.

Dividends

CBTX pays an annual dividend of $0.40 per share and has a dividend yield of 1.5%. Simmons First National pays an annual dividend of $0.64 per share and has a dividend yield of 2.9%. CBTX pays out 21.2% of its earnings in the form of a dividend. Simmons First National pays out 27.0% 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. Simmons First National has raised its dividend for 7 consecutive years. Simmons First National is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares CBTX and Simmons First National’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
CBTX $137.51 million 5.20 $47.29 million $1.89 14.54
Simmons First National $824.58 million 2.60 $215.71 million $2.37 9.44

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

Risk & Volatility

CBTX has a beta of 1.09, meaning that its share price is 9% more volatile than the S&P 500. Comparatively, Simmons First National has a beta of 1.08, meaning that its share price is 8% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
CBTX 31.19% 10.14% 1.51%
Simmons First National 25.17% 9.76% 1.33%

Institutional & Insider Ownership

28.8% of CBTX shares are held by institutional investors. Comparatively, 20.9% of Simmons First National shares are held by institutional investors. 29.2% of CBTX shares are held by insiders. Comparatively, 2.0% of Simmons First National shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

CBTX beats Simmons First National on 9 of the 17 factors compared between the two stocks.

CBTX Company Profile

CBTX, Inc. operates as the bank holding company for CommunityBank of Texas, National Association that provides commercial banking solutions to small and mid-sized businesses, and professionals in the United States. The company offers various deposit products, including demand, savings, money market, and time accounts; and loans, such as commercial and industrial loans, commercial real estate loans, construction and development loans, 1-4 family residential mortgage loans, multi-family residential loans, consumer loans, and agricultural loans. It also provides treasury and online banking services. CBTX, Inc. operates 35 banking locations, including 19 branches in Houston; 15 branches in Beaumont; and 1 branch in Dallas. The company was formerly known as CBFH, Inc. and changed its name to CBTX, Inc. in September 2017. CBTX, Inc. was founded in 2007 and is based in Houston, Texas.

Simmons First National Company Profile

Simmons First National Corporation operates as the holding company for Simmons Bank that provides financial products and services to individuals and businesses. It offers checking, savings, and time deposits; loan products, including consumer, real estate, commercial, agricultural, equipment, and SBA lending; personal and corporate trust services; credit cards; investment management products; insurance products; and securities and investment services. The company conducts banking operations through approximately 191 financial centers located in communities throughout Arkansas, Colorado, Kansas, Missouri, Oklahoma, Tennessee, and Texas. Simmons First National Corporation was founded in 1903 and is headquartered in Pine Bluff, Arkansas.

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