Contrasting Hilltop (NYSE:HTH) & Commonwealth Business Bank (OTCMKTS:CBBI)

Commonwealth Business Bank (OTCMKTS:CBBI) 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 profitability, valuation, earnings, dividends, institutional ownership, risk and analyst recommendations.

Dividends

Commonwealth Business Bank pays an annual dividend of $0.50 per share and has a dividend yield of 4.5%. Hilltop pays an annual dividend of $0.72 per share and has a dividend yield of 2.1%. Commonwealth Business Bank pays out 27.8% of its earnings in the form of a dividend. Hilltop pays out 28.7% 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. Hilltop has raised its dividend for 8 consecutive years. Commonwealth Business Bank is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Commonwealth Business Bank has a beta of 0.19, suggesting that its stock price is 81% less volatile than the S&P 500. Comparatively, Hilltop has a beta of 0.94, suggesting that its stock price is 6% less volatile than the S&P 500.

Institutional & Insider Ownership

57.1% of Hilltop shares are owned by institutional investors. 29.9% of Hilltop shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares Commonwealth Business Bank and Hilltop’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Commonwealth Business Bank	15.89%	N/A	N/A
Hilltop	9.86%	7.18%	1.01%

Earnings and Valuation

This table compares Commonwealth Business Bank and Hilltop”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Commonwealth Business Bank	$122.69 million	N/A	$22.43 million	$1.80	6.13
Hilltop	$1.61 billion	1.30	$113.21 million	$2.51	13.60

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

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Commonwealth Business Bank and Hilltop, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Commonwealth Business Bank	0	0	0	0	0.00
Hilltop	0	4	1	0	2.20

Hilltop has a consensus target price of $34.00, suggesting a potential downside of 0.40%. Given Hilltop’s stronger consensus rating and higher possible upside, analysts clearly believe Hilltop is more favorable than Commonwealth Business Bank.

Summary

Hilltop beats Commonwealth Business Bank on 13 of the 16 factors compared between the two stocks.

About Commonwealth Business Bank

CBB Bancorp, Inc. operates as the holding company for Commonwealth Business Bank that provides various commercial banking products and services to individuals and businesses in the United States. It offers checking, savings, money market, and certification of deposit accounts; SBA lending; business lines of credit; business term loans; business and commercial property loans; construction loans; and credit cards. The company also provides treasury management, and mobile and online banking services, as well as title and escrow services. In addition, it engages in investing activities; and offers trade finance services, including commercial letters of credit, standby letters of credit, and documentary collection services. The company offers its services through full-service and limited-service branches in Southern California, Dallas, Texas and Honolulu, and Hawaii; and loan production offices in the states of Colorado, Georgia, Texas, and Washington. CBB Bancorp, Inc. was founded in 2005 and is headquartered in Los Angeles, California.

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.