Hilltop (NYSE:HTH) vs. South Plains Financial (NASDAQ:SPFI) Critical Review

South Plains Financial (NASDAQ:SPFI) and Hilltop (NYSE:HTH) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, profitability, dividends, analyst recommendations, valuation, risk and institutional ownership.

Dividends

South Plains Financial pays an annual dividend of $0.64 per share and has a dividend yield of 1.6%. Hilltop pays an annual dividend of $0.72 per share and has a dividend yield of 2.1%. South Plains Financial pays out 18.3% 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. South Plains Financial has increased its dividend for 5 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.

Valuation and Earnings

This table compares South Plains Financial and Hilltop”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
South Plains Financial	$203.74 million	3.10	$49.72 million	$3.50	11.12
Hilltop	$1.61 billion	1.29	$113.21 million	$2.51	13.52

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

Institutional & Insider Ownership

55.0% of South Plains Financial shares are held by institutional investors. Comparatively, 57.1% of Hilltop shares are held by institutional investors. 25.4% of South Plains Financial shares are held by company insiders. Comparatively, 29.9% of Hilltop shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares South Plains Financial and Hilltop’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
South Plains Financial	20.09%	13.16%	1.37%
Hilltop	9.86%	7.18%	1.01%

Volatility and Risk

South Plains Financial has a beta of 0.61, meaning that its share price is 39% less volatile than the S&P 500. Comparatively, Hilltop has a beta of 0.94, meaning that its share price is 6% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for South Plains Financial and Hilltop, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
South Plains Financial	0	2	4	0	2.67
Hilltop	0	4	1	0	2.20

South Plains Financial currently has a consensus target price of $44.25, indicating a potential upside of 13.73%. Hilltop has a consensus target price of $34.00, indicating a potential upside of 0.20%. Given South Plains Financial’s stronger consensus rating and higher possible upside, analysts plainly believe South Plains Financial is more favorable than Hilltop.

Summary

South Plains Financial beats Hilltop on 9 of the 17 factors compared between the two stocks.

About South Plains Financial

South Plains Financial, Inc. operates as a bank holding company for City Bank that provides commercial and consumer financial services to small and medium-sized businesses and individuals. The company operates through two segments, Banking and Insurance. It offers deposit products, including demand deposit accounts, interest-bearing products, savings accounts, and certificate of deposits. The company also provides commercial real estate loans; general and specialized commercial loans, including agricultural production and real estate, energy, finance, investment, and insurance loans, as well as loans to goods, services, restaurant and retail, construction, and other industries; residential construction loans; and 1-4 family residential loans, auto loans, and other loans for recreational vehicles or other purposes. In addition, it offers crop insurance products; trust products and services; investment services; mortgage banking services; online and mobile banking services; and debit and credit cards. The company was founded in 1941 and is headquartered in Lubbock, 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.