Analyzing Home Bancorp (NASDAQ:HBCP) and Towne Bank (NASDAQ:TOWN)

Home Bancorp (NASDAQ:HBCP) and Towne Bank (NASDAQ:TOWN) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, dividends, risk, profitability, valuation and earnings.

Dividends

Home Bancorp pays an annual dividend of $1.24 per share and has a dividend yield of 1.9%. Towne Bank pays an annual dividend of $1.12 per share and has a dividend yield of 3.3%. Home Bancorp pays out 20.8% of its earnings in the form of a dividend. Towne Bank pays out 56.6% 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. Home Bancorp has raised its dividend for 10 consecutive years and Towne Bank has raised its dividend for 13 consecutive years. Towne Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Home Bancorp has a beta of 0.5, indicating that its stock price is 50% less volatile than the S&P 500. Comparatively, Towne Bank has a beta of 0.7, indicating that its stock price is 30% less volatile than the S&P 500.

Institutional & Insider Ownership

49.4% of Home Bancorp shares are owned by institutional investors. Comparatively, 56.0% of Towne Bank shares are owned by institutional investors. 6.2% of Home Bancorp shares are owned by insiders. Comparatively, 8.1% of Towne Bank shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Home Bancorp and Towne Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Home Bancorp	22.18%	10.86%	1.32%
Towne Bank	13.51%	9.91%	1.24%

Valuation & Earnings

This table compares Home Bancorp and Towne Bank”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Home Bancorp	$209.23 million	2.45	$46.06 million	$5.95	10.99
Towne Bank	$897.04 million	2.99	$169.53 million	$1.98	17.15

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

Analyst Recommendations

This is a breakdown of current ratings and target prices for Home Bancorp and Towne Bank, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Home Bancorp	0	3	1	1	2.60
Towne Bank	1	1	2	0	2.25

Home Bancorp currently has a consensus target price of $65.50, indicating a potential upside of 0.14%. Towne Bank has a consensus target price of $39.50, indicating a potential upside of 16.31%. Given Towne Bank’s higher possible upside, analysts plainly believe Towne Bank is more favorable than Home Bancorp.

Summary

Towne Bank beats Home Bancorp on 11 of the 18 factors compared between the two stocks.

About Home Bancorp

Home Bancorp, Inc. operates as the bank holding company for Home Bank, National Association that provides various banking products and services in Louisiana, Mississippi, and Texas. It offers deposit products, including interest-bearing and noninterest-bearing checking, money market, savings, NOW, and certificates of deposit accounts. The company also provides various loan products comprising one-to four-family first mortgage loans, home equity loans and lines, commercial real estate loans, construction and land loans, multi-family residential loans, commercial and industrial loans, and consumer loans. In addition, it invests in securities; and offers credit cards and online banking services. Home Bancorp, Inc. was founded in 1908 and is headquartered in Lafayette, Louisiana.

About Towne Bank

TowneBank provides retail and commercial banking services for individuals, commercial enterprises, and professionals. The company operates through three segments: Banking, Realty, and Insurance. It accepts various deposits, including demand deposits, savings accounts, money rate savings, certificates of deposit, and individual retirement accounts. The company also offers secured and unsecured personal loans for financing automobiles, home improvements, education, and personal investments; commercial loans for working capital, business expansion, and equipment and machinery purchases; and mortgage loans, as well as real estate acquisition, development, and construction loans. In addition, it provides other services, such as safe deposit boxes, treasury management services, direct deposit of payroll and social security checks, and automatic drafts for various accounts, as well as online, mobile, and on-call banking services. Further, the company offers documentation services to accomplish tax deferral to investors; investment and asset management services; commercial mortgage brokerage services; and other financial services, such as financial, retirement, and estate planning services, as well as assistance on various investment options comprising alternative investments, annuities, margin accounts, convertible bonds, and pension and profit-sharing plans. Additionally, it provides residential real estate, relocation, property management, vacation rentals, and title and settlement services; and originates residential mortgage loans. The company also offers life, property, casualty, and vehicle insurance services; and employee benefit programs, such as health, dental, vision, and disability insurance. It operates in Richmond, Virginia, the Greater Hampton Roads region in southeastern Virginia, northeastern North Carolina, Raleigh, Charlotte, Greensboro, and Greenville, North Carolina. TowneBank was incorporated in 1998 and is based in Portsmouth, Virginia.