Head-To-Head Analysis: Home BancShares (NYSE:HOMB) vs. United Bancorporation of Alabama (OTCMKTS:UBAB)

United Bancorporation of Alabama (OTCMKTS:UBAB) and Home BancShares (NYSE:HOMB) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, valuation, institutional ownership, earnings, profitability, risk and analyst recommendations.

Dividends

United Bancorporation of Alabama pays an annual dividend of $1.42 per share and has a dividend yield of 2.4%. Home BancShares pays an annual dividend of $0.84 per share and has a dividend yield of 2.7%. United Bancorporation of Alabama pays out 25.4% of its earnings in the form of a dividend. Home BancShares pays out 34.7% 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 has increased its dividend for 15 consecutive years. Home BancShares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of current ratings for United Bancorporation of Alabama and Home BancShares, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
United Bancorporation of Alabama	0	1	0	0	2.00
Home BancShares	0	4	3	0	2.43

Home BancShares has a consensus price target of $32.80, suggesting a potential upside of 6.44%. Given Home BancShares’ stronger consensus rating and higher possible upside, analysts clearly believe Home BancShares is more favorable than United Bancorporation of Alabama.

Insider & Institutional Ownership

5.5% of United Bancorporation of Alabama shares are held by institutional investors. Comparatively, 67.3% of Home BancShares shares are held by institutional investors. 6.4% of Home BancShares shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares United Bancorporation of Alabama and Home BancShares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
United Bancorporation of Alabama	22.47%	13.65%	1.42%
Home BancShares	32.10%	11.25%	2.11%

Risk & Volatility

United Bancorporation of Alabama has a beta of 0.45, indicating that its stock price is 55% less volatile than the S&P 500. Comparatively, Home BancShares has a beta of 0.68, indicating that its stock price is 32% less volatile than the S&P 500.

Earnings & Valuation

This table compares United Bancorporation of Alabama and Home BancShares”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
United Bancorporation of Alabama	$89.83 million	2.04	$19.67 million	$5.60	10.67
Home BancShares	$1.48 billion	4.20	$475.44 million	$2.42	12.73

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

Summary

Home BancShares beats United Bancorporation of Alabama on 14 of the 17 factors compared between the two stocks.

About United Bancorporation of Alabama

United Bancorporation of Alabama, Inc. operates as the bank holding company for United Bank that provides banking services. The company offers checking and savings accounts, certificates of deposit, individual retirement accounts, small business programs, business solutions, merchant services, and cash management services. It also provides various lending services, such as personal loans, business loans, lines of credit, and equipment loans; real estate loans for the agricultural community and working lines of credit; and overdraft services. In addition, the company offers debit cards, prepaid cards, Visa credit cards, gift cards, and safe deposit boxes. Further, it provides check cashing, convenience, remote deposit, mobile check deposit, personal storage compartments, Web payment options, insurance products, investment and brokerage, and online and mobile banking services. United Bancorporation of Alabama, Inc. was founded in 1904 and is based in Atmore, Alabama.

About Home BancShares

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.