Critical Comparison: Popular (NASDAQ:BPOP) & Home Bancshares, Inc. (Conway, AR) (NYSE:HOMB)

Home Bancshares, Inc. (Conway, AR) (NYSE:HOMB) and Popular (NASDAQ:BPOP) are both mid-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their valuation, dividends, risk, institutional ownership, earnings, analyst recommendations and profitability.

Dividends

Home Bancshares, Inc. (Conway, AR) pays an annual dividend of $0.78 per share and has a dividend yield of 2.6%. Popular pays an annual dividend of $2.80 per share and has a dividend yield of 2.7%. Home Bancshares, Inc. (Conway, AR) pays out 38.6% of its earnings in the form of a dividend. Popular pays out 32.7% 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, Inc. (Conway, AR) has increased its dividend for 14 consecutive years. Popular is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Home Bancshares, Inc. (Conway, AR) and Popular’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Home Bancshares, Inc. (Conway, AR)	27.39%	10.31%	1.77%
Popular	14.15%	11.89%	0.90%

Earnings and Valuation

This table compares Home Bancshares, Inc. (Conway, AR) and Popular”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Home Bancshares, Inc. (Conway, AR)	$1.47 billion	4.07	$402.24 million	$2.02	14.89
Popular	$4.33 billion	1.73	$612.80 million	$8.56	12.30

Popular has higher revenue and earnings than Home Bancshares, Inc. (Conway, AR). Popular is trading at a lower price-to-earnings ratio than Home Bancshares, Inc. (Conway, AR), indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings for Home Bancshares, Inc. (Conway, AR) and Popular, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Home Bancshares, Inc. (Conway, AR)	0	2	3	0	2.60
Popular	0	2	6	0	2.75

Home Bancshares, Inc. (Conway, AR) currently has a consensus price target of $32.00, indicating a potential upside of 6.42%. Popular has a consensus price target of $112.25, indicating a potential upside of 6.58%. Given Popular’s stronger consensus rating and higher probable upside, analysts plainly believe Popular is more favorable than Home Bancshares, Inc. (Conway, AR).

Insider and Institutional Ownership

67.3% of Home Bancshares, Inc. (Conway, AR) shares are held by institutional investors. Comparatively, 87.3% of Popular shares are held by institutional investors. 7.7% of Home Bancshares, Inc. (Conway, AR) shares are held by insiders. Comparatively, 2.1% of Popular shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Volatility and Risk

Home Bancshares, Inc. (Conway, AR) has a beta of 1.1, suggesting that its stock price is 10% more volatile than the S&P 500. Comparatively, Popular has a beta of 0.82, suggesting that its stock price is 18% less volatile than the S&P 500.

Summary

Popular beats Home Bancshares, Inc. (Conway, AR) on 10 of the 17 factors compared between the two stocks.

About Home Bancshares, Inc. (Conway, AR)

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.

About Popular

Popular, Inc., through its subsidiaries, provides various retail, mortgage, and commercial banking products and services in Puerto Rico, the United States, and the British Virgin Islands. The company provides savings, NOW, money market, and other interest-bearing demand accounts; non-interest bearing demand deposits; and certificates of deposit. It also offers commercial and industrial, commercial multi-family, commercial real estate, and residential mortgage loans; consumer loans, including personal loans, credit cards, automobile loans, home equity lines of credit, and other loans to individual borrowers; construction loans; and lease financing comprising automobile loans/leases. In addition, the company provides investment banking, auto and equipment leasing and financing, broker-dealer, and insurance services; debit cards; and online banking services. Popular, Inc. was founded in 1893 and is headquartered in Hato Rey, Puerto Rico.