Head-To-Head Review: MetroCity Bankshares (NASDAQ:MCBS) vs. Hilltop (NYSE:HTH)

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

Dividends

MetroCity Bankshares pays an annual dividend of $0.92 per share and has a dividend yield of 3.2%. Hilltop pays an annual dividend of $0.72 per share and has a dividend yield of 2.4%. MetroCity Bankshares pays out 35.8% of its earnings in the form of a dividend. Hilltop pays out 36.5% 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. MetroCity Bankshares is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares MetroCity Bankshares and Hilltop”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MetroCity Bankshares	$235.98 million	3.06	$64.50 million	$2.57	11.08
Hilltop	$1.61 billion	1.21	$113.21 million	$1.97	15.36

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
MetroCity Bankshares	28.03%	15.91%	1.83%
Hilltop	7.87%	5.79%	0.80%

Risk and Volatility

MetroCity Bankshares has a beta of 0.61, suggesting that its stock price is 39% less volatile than the S&P 500. Comparatively, Hilltop has a beta of 0.87, suggesting that its stock price is 13% less volatile than the S&P 500.

Insider and Institutional Ownership

25.3% of MetroCity Bankshares shares are owned by institutional investors. Comparatively, 57.1% of Hilltop shares are owned by institutional investors. 27.5% of MetroCity Bankshares shares are owned by insiders. Comparatively, 29.9% of Hilltop 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.

Analyst Recommendations

This is a summary of recent ratings and price targets for MetroCity Bankshares and Hilltop, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MetroCity Bankshares	0	1	0	0	2.00
Hilltop	0	3	0	0	2.00

MetroCity Bankshares currently has a consensus target price of $34.00, indicating a potential upside of 19.42%. Hilltop has a consensus target price of $33.00, indicating a potential upside of 9.09%. Given MetroCity Bankshares’ higher possible upside, equities analysts clearly believe MetroCity Bankshares is more favorable than Hilltop.

Summary

MetroCity Bankshares beats Hilltop on 8 of the 15 factors compared between the two stocks.

About MetroCity Bankshares

MetroCity Bankshares, Inc. operates as the bank holding company for Metro City Bank that engages in the provision of banking products and services in the United States. It offers customary banking services, such as consumer and commercial checking accounts, savings, and money market accounts, as well as certificates of deposit. The company also provides commercial and consumer loans, including single family residential loans; construction and development, and owner and non-owner occupied commercial real estate loans; letters of credit; and commercial and industrial loans, residential mortgage loans, and SBA loans. In addition, it offers online banking services, which include access to account balances, online transfers, online bill payment, and electronic delivery of customer statements; mobile banking solutions, such as remote check deposit with mobile bill pay; and automated teller machines and telephone banking services. Further, it provides debit cards for checking customers, direct deposits, and cashier's checks; treasury management services, including wire transfer, automated clearing house, and stop payments services; and cash management deposit products, such as remote deposit capture, positive pay, zero balance accounts, and sweep accounts. The company was founded in 2006 and is headquartered in Atlanta, Georgia.

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.