UMB Financial (NASDAQ:UMBF) vs. Home BancShares (NYSE:HOMB) Critical Comparison

UMB Financial (NASDAQ:UMBF) and Home BancShares (NYSE:HOMB) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, valuation, risk, analyst recommendations, institutional ownership, earnings and profitability.

Insider and Institutional Ownership

87.8% of UMB Financial shares are held by institutional investors. Comparatively, 67.3% of Home BancShares shares are held by institutional investors. 5.3% of UMB Financial shares are held by company insiders. Comparatively, 6.4% of Home BancShares shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent ratings and price targets for UMB Financial and Home BancShares, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
UMB Financial	0	4	11	1	2.81
Home BancShares	0	4	5	0	2.56

UMB Financial presently has a consensus price target of $167.93, indicating a potential upside of 22.61%. Home BancShares has a consensus price target of $33.00, indicating a potential upside of 9.80%. Given UMB Financial’s stronger consensus rating and higher probable upside, research analysts clearly believe UMB Financial is more favorable than Home BancShares.

Earnings & Valuation

This table compares UMB Financial and Home BancShares”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
UMB Financial	$4.14 billion	2.51	$702.40 million	$12.01	11.40
Home BancShares	$1.48 billion	4.07	$475.44 million	$2.42	12.42

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

Dividends

UMB Financial pays an annual dividend of $2.00 per share and has a dividend yield of 1.5%. Home BancShares pays an annual dividend of $0.92 per share and has a dividend yield of 3.1%. UMB Financial pays out 16.7% of its earnings in the form of a dividend. Home BancShares pays out 38.0% 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. UMB Financial has raised its dividend for 32 consecutive years and Home BancShares has raised its dividend for 15 consecutive years.

Volatility & Risk

UMB Financial has a beta of 0.77, indicating that its stock price is 23% less volatile than the S&P 500. Comparatively, Home BancShares has a beta of 0.67, indicating that its stock price is 33% less volatile than the S&P 500.

Profitability

This table compares UMB Financial and Home BancShares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
UMB Financial	21.64%	13.41%	1.38%
Home BancShares	32.10%	11.12%	2.07%

Summary

UMB Financial beats Home BancShares on 12 of the 18 factors compared between the two stocks.

About UMB Financial

UMB Financial Corporation operates as the bank holding company that provides banking services and asset servicing in the United States and internationally. The Commercial Banking segment provides commercial loans and credit card; commercial real estate financing; letters of credit; loan syndication, and consultative service; various business solutions including asset-based lending, mezzanine debt, and minority equity investment; and treasury management service, such as depository service, account reconciliation, cash management tool, accounts payable and receivable solution, electronic fund transfer and automated payment, controlled disbursement, lockbox service, and remote deposit capture service. The Institutional Banking segment offers fund, asset management, and healthcare service to institutional clients; and fund administration and accounting, investor service and transfer agency, mutual fund service, alternative investment service, fixed income sale, trading and underwriting, and corporate trust and escrow service, as well as institutional custody service. This segment also provides healthcare payment solution includes custodial service for health saving accounts and private label, multipurpose debit cards to insurance carriers, third-party administrator, software companies, employers, and financial institutions. The Personal Banking segment offers deposit account, retail credit card, private banking, installment loan, home equity line of credit, residential mortgage, as well as internet banking, ATM network, private banking, brokerage and insurance service, and investment advisory, custody, and trust services. It operates through a network of branches and offices. The company was founded in 1913 and is headquartered in Kansas City, Missouri.

About Home BancShares

Home Bancshares, Inc. (Conway, AR) operates as the bank holding company for Centennial Bank that provides commercial and retail banking, and related financial services to businesses, real estate developers and investors, individuals, and municipalities. Its deposit products include checking, savings, and money market accounts, as well as certificates of deposit. The company's loan portfolio comprises non-farm/non-residential real estate, construction/land development, residential mortgage, consumer, agricultural, and commercial and industrial loans. It provides internet banking, mobile banking and voice response information, cash management, overdraft protection, direct deposit, and automatic account transfer services, as well as safe deposit boxes and the United States savings bonds. In addition, the company writes policies for commercial and personal lines of business, including insurance for property, casualty, life, health, and employee benefits. It operates through branches in Arkansas, Florida, Alabama, Texas, and New York City. Home Bancshares, Inc. (Conway, AR) was founded in 1998 and is headquartered in Conway, Arkansas.