Critical Comparison: Home BancShares (NYSE:HOMB) & Columbia Financial (NASDAQ:CLBK)

Columbia Financial (NASDAQ:CLBK) and Home BancShares (NYSE:HOMB) are both mid-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, profitability, earnings, analyst recommendations and risk.

Institutional and Insider Ownership

12.7% of Columbia Financial shares are held by institutional investors. Comparatively, 67.3% of Home BancShares shares are held by institutional investors. 3.5% of Columbia 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 endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Risk and Volatility

Columbia Financial has a beta of 0.27, meaning that its stock price is 73% less volatile than the S&P 500. Comparatively, Home BancShares has a beta of 0.73, meaning that its stock price is 27% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations for Columbia Financial and Home BancShares, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Columbia Financial	0	1	3	0	2.75
Home BancShares	0	5	5	0	2.50

Columbia Financial presently has a consensus target price of $15.10, indicating a potential upside of 33.04%. Home BancShares has a consensus target price of $32.71, indicating a potential upside of 8.20%. Given Columbia Financial’s stronger consensus rating and higher probable upside, analysts plainly believe Columbia Financial is more favorable than Home BancShares.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Columbia Financial	8.54%	5.17%	0.67%
Home BancShares	32.36%	11.14%	2.08%

Dividends

Columbia Financial pays an annual dividend of $0.20 per share and has a dividend yield of 1.8%. Home BancShares pays an annual dividend of $0.92 per share and has a dividend yield of 3.0%. Columbia Financial pays out 69.0% of its earnings in the form of a dividend. Home BancShares pays out 37.7% 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. Home BancShares has raised its dividend for 15 consecutive years. Home BancShares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Columbia Financial and Home BancShares”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Columbia Financial	$508.02 million	6.02	$51.77 million	$0.29	39.14
Home BancShares	$1.48 billion	4.07	$475.44 million	$2.44	12.39

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

Summary

Home BancShares beats Columbia Financial on 13 of the 17 factors compared between the two stocks.

About Columbia Financial

Columbia Financial, Inc. is the holding company for Columbia Bank, a community bank headquartered in Fair Lawn, New Jersey. The bank serves individuals, businesses and organizations, primarily in northern and central New Jersey. Columbia Bank offers deposit accounts and lending services, including residential mortgages, home equity loans, commercial real estate financing and other business loans. It also provides digital and traditional banking services for personal and business customers. The bank traces its history to the Columbia Building and Loan Association, established in 1926.

About Home BancShares

Home BancShares, Inc. is a bank holding company headquartered in Conway, Arkansas. Founded in 1998, it provides banking services through its principal subsidiary, Centennial Bank. Centennial Bank serves customers in Arkansas, Florida, Alabama and Texas. Its offerings include personal and business deposit accounts, loans, mortgages, and other commercial and retail banking services. The company serves individuals, businesses and organizations, with products and services tailored to both consumer and commercial banking needs.