Critical Analysis: Home Bancorp (NASDAQ:HBCP) vs. Bank7 (NASDAQ:BSVN)

Bank7 (NASDAQ:BSVN) and Home Bancorp (NASDAQ:HBCP) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, earnings, profitability and dividends.

Dividends

Bank7 pays an annual dividend of $1.08 per share and has a dividend yield of 2.2%. Home Bancorp pays an annual dividend of $1.24 per share and has a dividend yield of 1.8%. Bank7 pays out 23.2% of its earnings in the form of a dividend. Home Bancorp pays out 20.8% 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. Bank7 has increased its dividend for 5 consecutive years and Home Bancorp has increased its dividend for 10 consecutive years.

Profitability

This table compares Bank7 and Home Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bank7	31.77%	18.18%	2.34%
Home Bancorp	22.18%	10.86%	1.32%

Risk and Volatility

Bank7 has a beta of 0.91, indicating that its stock price is 9% less volatile than the S&P 500. Comparatively, Home Bancorp has a beta of 0.49, indicating that its stock price is 51% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for Bank7 and Home Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bank7	0	1	3	0	2.75
Home Bancorp	0	3	1	1	2.60

Bank7 currently has a consensus target price of $54.50, suggesting a potential upside of 9.72%. Home Bancorp has a consensus target price of $65.50, suggesting a potential downside of 2.36%. Given Bank7’s stronger consensus rating and higher probable upside, equities analysts clearly believe Bank7 is more favorable than Home Bancorp.

Earnings and Valuation

This table compares Bank7 and Home Bancorp”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bank7	$137.26 million	3.44	$43.07 million	$4.66	10.66
Home Bancorp	$209.23 million	2.51	$46.06 million	$5.95	11.27

Home Bancorp has higher revenue and earnings than Bank7. Bank7 is trading at a lower price-to-earnings ratio than Home Bancorp, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

23.5% of Bank7 shares are held by institutional investors. Comparatively, 49.4% of Home Bancorp shares are held by institutional investors. 25.7% of Bank7 shares are held by insiders. Comparatively, 6.2% of Home Bancorp shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

Bank7 beats Home Bancorp on 10 of the 18 factors compared between the two stocks.

About Bank7

Bank7 Corp. operates as a bank holding company for Bank7 that provides banking and financial services to individual and corporate customers. It offers commercial deposit, commercial checking, money market, and other deposit accounts; and retail deposit services, such as certificates of deposit, money market accounts, checking accounts, negotiable order of withdrawal accounts, savings accounts, and automated teller machine access. The company also provides commercial real estate, hospitality, energy, and commercial and industrial lending services; consumer lending services to individuals for personal and household purposes comprising residential real estate loans and mortgage banking services, personal lines of credit, loans for the purchase of automobiles, and other installment loans, as well as secured and unsecured term loans and home improvement loans. It operates through a network of full-service branches in Oklahoma, the Dallas/Fort Worth, Texas metropolitan area, and Kansas. The company was formerly known as Haines Financial Corp. Bank7 Corp. was founded in 1901 and is headquartered in Oklahoma City, Oklahoma.

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.