Home Bancshares, Inc. (Conway, AR) (NYSE:HOMB) versus Community Trust Bancorp (NASDAQ:CTBI) Critical Survey

Community Trust Bancorp (NASDAQ:CTBI) and Home Bancshares, Inc. (Conway, AR) (NYSE:HOMB) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their profitability, earnings, risk, valuation, institutional ownership, dividends and analyst recommendations.

Volatility and Risk

Community Trust Bancorp has a beta of 0.56, indicating that its share price is 44% less volatile than the S&P 500. Comparatively, Home Bancshares, Inc. (Conway, AR) has a beta of 0.79, indicating that its share price is 21% less volatile than the S&P 500.

Dividends

Community Trust Bancorp pays an annual dividend of $1.88 per share and has a dividend yield of 3.7%. Home Bancshares, Inc. (Conway, AR) pays an annual dividend of $0.80 per share and has a dividend yield of 2.8%. Community Trust Bancorp pays out 39.2% of its earnings in the form of a dividend. Home Bancshares, Inc. (Conway, AR) pays out 38.1% 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. Community Trust Bancorp has raised its dividend for 44 consecutive years and Home Bancshares, Inc. (Conway, AR) has raised its dividend for 15 consecutive years. Community Trust Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares Community Trust Bancorp and Home Bancshares, Inc. (Conway, AR)”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Community Trust Bancorp	$256.00 million	3.63	$82.81 million	$4.79	10.71
Home Bancshares, Inc. (Conway, AR)	$1.01 billion	5.50	$402.24 million	$2.10	13.47

Home Bancshares, Inc. (Conway, AR) has higher revenue and earnings than Community Trust Bancorp. Community Trust Bancorp 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.

Insider & Institutional Ownership

60.2% of Community Trust Bancorp shares are owned by institutional investors. Comparatively, 67.3% of Home Bancshares, Inc. (Conway, AR) shares are owned by institutional investors. 4.3% of Community Trust Bancorp shares are owned by insiders. Comparatively, 6.3% of Home Bancshares, Inc. (Conway, AR) shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Community Trust Bancorp	22.02%	11.36%	1.41%
Home Bancshares, Inc. (Conway, AR)	27.39%	10.31%	1.77%

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Community Trust Bancorp and Home Bancshares, Inc. (Conway, AR), as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Community Trust Bancorp	0	0	2	0	3.00
Home Bancshares, Inc. (Conway, AR)	0	2	3	0	2.60

Community Trust Bancorp presently has a consensus target price of $57.00, indicating a potential upside of 11.09%. Home Bancshares, Inc. (Conway, AR) has a consensus target price of $32.40, indicating a potential upside of 14.57%. Given Home Bancshares, Inc. (Conway, AR)’s higher possible upside, analysts plainly believe Home Bancshares, Inc. (Conway, AR) is more favorable than Community Trust Bancorp.

Summary

Home Bancshares, Inc. (Conway, AR) beats Community Trust Bancorp on 12 of the 17 factors compared between the two stocks.

About Community Trust Bancorp

Community Trust Bancorp, Inc. operates as the bank holding company for Community Trust Bank, Inc. that engages in the provision of commercial and personal banking, and trust and wealth management services to small and mid-sized communities in eastern, northeastern, central, and south-central Kentucky, as well as southern West Virginia, and northeastern Tennessee. The company accepts time and demand deposits, checking accounts, savings accounts and savings certificates, individual retirement accounts and Keogh plans, and money market accounts. Its loan portfolio includes commercial, construction, mortgage, and personal loans; lease-financing, lines of credit, revolving lines of credit, and term loans, as well as other specialized loans, including asset-based financing; residential and commercial real estate loans; and consumer loans. The company also provides cash management, renting safe deposit boxes, and funds transfer services; issues letters of credit; and acts as a trustee of personal trusts, executor of estates, trustee for employee benefit trusts, and paying agent for bond and stock issues, as well as an investment agent and depositor for securities. In addition, it offers securities brokerage services; debit cards; annuity and life insurance products; and repurchase agreements, as well as mobile, internet banking, and e-statement services. The company was founded in 1903 and is headquartered in Pikeville, Kentucky.

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.