Hilltop (NYSE:HTH) versus Benchmark Bankshares (OTCMKTS:BMBN) Critical Analysis

Hilltop (NYSE:HTH) and Benchmark Bankshares (OTCMKTS:BMBN) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, dividends, valuation, risk, profitability and institutional ownership.

Risk and Volatility

Hilltop has a beta of 0.92, meaning that its stock price is 8% less volatile than the S&P 500. Comparatively, Benchmark Bankshares has a beta of 0.13, meaning that its stock price is 87% less volatile than the S&P 500.

Dividends

Hilltop pays an annual dividend of $0.80 per share and has a dividend yield of 2.2%. Benchmark Bankshares pays an annual dividend of $0.96 per share and has a dividend yield of 2.6%. Hilltop pays out 30.2% of its earnings in the form of a dividend. Benchmark Bankshares pays out 21.5% 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. Hilltop has increased its dividend for 8 consecutive years. Benchmark Bankshares is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of recent ratings and target prices for Hilltop and Benchmark Bankshares, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hilltop	0	3	1	0	2.25
Benchmark Bankshares	0	0	0	0	0.00

Hilltop currently has a consensus target price of $37.50, suggesting a potential upside of 1.20%. Given Hilltop’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Hilltop is more favorable than Benchmark Bankshares.

Insider and Institutional Ownership

57.1% of Hilltop shares are owned by institutional investors. Comparatively, 3.2% of Benchmark Bankshares shares are owned by institutional investors. 29.9% of Hilltop shares are owned by company insiders. Comparatively, 14.0% of Benchmark Bankshares shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Hilltop and Benchmark Bankshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hilltop	10.19%	7.47%	1.06%
Benchmark Bankshares	23.80%	N/A	N/A

Earnings and Valuation

This table compares Hilltop and Benchmark Bankshares”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hilltop	$1.63 billion	1.36	$165.59 million	$2.65	13.98
Benchmark Bankshares	$83.37 million	1.98	$19.84 million	$4.46	8.29

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

Summary

Hilltop beats Benchmark Bankshares on 12 of the 17 factors compared between the two stocks.

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.

About Benchmark Bankshares

Benchmark Bankshares, Inc. operates as the holding company for Benchmark Community Bank that provides various banking products and services in the United States. The company accepts various deposits, such as checking, saving, commercial services, and youth accounts. Its loan products include personal, mortgage, other real estate, business, auto, and student loans. The company also offers credit and debit cards; wealth management services comprising financial solutions, financial and retirement planning, and portfolio management, as well as estate, charitable giving, and trust services; and reorder checks, safe deposit boxes, wire transfers, bill pay, and internet and mobile banking services. The company was founded in 1971 and is based in Kenbridge, Virginia.