Head to Head Analysis: Texas Community Bancshares (NASDAQ:TCBS) & Hilltop (NYSE:HTH)

Texas Community Bancshares (NASDAQ:TCBS) and Hilltop (NYSE:HTH) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, valuation, institutional ownership, risk, profitability, analyst recommendations and dividends.

Valuation & Earnings

This table compares Texas Community Bancshares and Hilltop”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Texas Community Bancshares	$20.55 million	2.33	-$1.30 million	$0.85	19.35
Hilltop	$1.61 billion	1.33	$113.21 million	$2.51	13.88

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

Analyst Recommendations

This is a summary of current ratings and price targets for Texas Community Bancshares and Hilltop, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Texas Community Bancshares	0	1	0	0	2.00
Hilltop	0	4	1	0	2.20

Hilltop has a consensus price target of $34.00, indicating a potential downside of 2.41%. Given Hilltop’s stronger consensus rating and higher possible upside, analysts clearly believe Hilltop is more favorable than Texas Community Bancshares.

Institutional & Insider Ownership

15.8% of Texas Community Bancshares shares are held by institutional investors. Comparatively, 57.1% of Hilltop shares are held by institutional investors. 19.5% of Texas Community Bancshares shares are held by insiders. Comparatively, 29.9% of Hilltop shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Texas Community Bancshares and Hilltop’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Texas Community Bancshares	9.98%	4.77%	0.57%
Hilltop	9.86%	7.18%	1.01%

Volatility and Risk

Texas Community Bancshares has a beta of 0.06, meaning that its stock price is 94% less volatile than the S&P 500. Comparatively, Hilltop has a beta of 0.94, meaning that its stock price is 6% less volatile than the S&P 500.

Dividends

Texas Community Bancshares pays an annual dividend of $0.20 per share and has a dividend yield of 1.2%. Hilltop pays an annual dividend of $0.72 per share and has a dividend yield of 2.1%. Texas Community Bancshares pays out 23.5% of its earnings in the form of a dividend. Hilltop pays out 28.7% 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. Texas Community Bancshares has increased its dividend for 1 consecutive years and Hilltop has increased its dividend for 8 consecutive years. Hilltop is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Hilltop beats Texas Community Bancshares on 13 of the 17 factors compared between the two stocks.

About Texas Community Bancshares

Texas Community Bancshares, Inc. operates as the bank holding company for Mineola Community Bank, S.S.B. that provides loans and banking services to consumers and commercial customers in Mineola, Texas and the surrounding area, and the Dallas Fort Worth Metroplex. It generates a selection of deposit accounts, including savings accounts, checking accounts, certificates of deposit, and individual retirement accounts. The company also originates primarily one- to four-family residential mortgage loans, commercial real estate loans, and construction and land loans; and car, boat, share, unsecured loans, etc., as well as agricultural loans, commercial loans, and consumer and other loans. In addition, it invests in securities; and offers sweep account, safe deposit boxes, e-statement, cards, online banking, and mobile banking services. Texas Community Bancshares, Inc. was founded in 1934 and is headquartered in Mineola, Texas.

About Hilltop

Hilltop Holdings Inc. provides business and consumer banking services. It operates through three segments: Banking, Broker-Dealer, and Mortgage Origination. The Banking segment offers savings, checking, interest-bearing checking, and money market accounts; certificates of deposit; lines and letters of credit, home improvement and equity loans, loans for purchasing and carrying securities, term, agricultural and commercial real estate, equipment loans, and other lending products; and mortgage, commercial and industrial loans, and term and construction finance. It also provides treasury management, asset management, check cards, safe deposit boxes, online banking, bill pay, and overdraft privilege services; and estate planning, management and administration, investment portfolio management, employee benefit accounts, and individual retirement accounts services, as well as automated teller machines. The Broker-Dealer segment offers public finance services that assist public entities in originating, syndicating, and distributing securities of municipalities and political subdivisions; specialized advisory and investment banking services; advice and guidance to arbitrage rebate compliance, portfolio management, and local government investment pool administration; advisory services and products for derivatives and commodities; agricultural insurance; and sells, trades in, and underwrites U.S. government and government agency bonds, corporate bonds, and municipal bonds; mortgage-backed, asset-backed, and commercial mortgage-backed securities and structured products; and provides asset and liability management advisory, clearing, retail, and securities lending services. The Mortgage Origination segment offers fixed and adjustable rate mortgages, jumbo, new construction, Federal Housing Administration, Veterans Affairs, and United States Department of Agriculture loans. Hilltop Holdings Inc. was incorporated in 1998 and is based in Dallas, Texas.