Citizens Financial Group (NYSE:CFG) and HopFed Bancorp (NASDAQ:HFBC) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, valuation, institutional ownership, profitability, dividends and analyst recommendations.

Dividends

Citizens Financial Group pays an annual dividend of $1.08 per share and has a dividend yield of 2.7%. HopFed Bancorp pays an annual dividend of $0.28 per share and has a dividend yield of 1.6%. Citizens Financial Group pays out 41.9% of its earnings in the form of a dividend. HopFed Bancorp pays out 36.8% 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. Citizens Financial Group has raised its dividend for 3 consecutive years. Citizens Financial Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

96.8% of Citizens Financial Group shares are held by institutional investors. Comparatively, 48.6% of HopFed Bancorp shares are held by institutional investors. 0.2% of Citizens Financial Group shares are held by company insiders. Comparatively, 4.1% of HopFed Bancorp shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Citizens Financial Group and HopFed Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Citizens Financial Group 26.72% 7.59% 0.99%
HopFed Bancorp 10.30% 6.18% 0.59%

Analyst Ratings

This is a breakdown of recent recommendations for Citizens Financial Group and HopFed Bancorp, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Citizens Financial Group 1 4 6 0 2.45
HopFed Bancorp 0 0 0 0 N/A

Citizens Financial Group currently has a consensus target price of $46.33, indicating a potential upside of 15.43%. Given Citizens Financial Group’s higher probable upside, analysts plainly believe Citizens Financial Group is more favorable than HopFed Bancorp.

Risk and Volatility

Citizens Financial Group has a beta of 1.37, suggesting that its share price is 37% more volatile than the S&P 500. Comparatively, HopFed Bancorp has a beta of 0.21, suggesting that its share price is 79% less volatile than the S&P 500.

Valuation & Earnings

This table compares Citizens Financial Group and HopFed Bancorp’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Citizens Financial Group $6.45 billion 2.96 $1.65 billion $2.58 15.56
HopFed Bancorp $41.78 million 2.84 $3.30 million $0.76 23.51

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

Summary

Citizens Financial Group beats HopFed Bancorp on 13 of the 16 factors compared between the two stocks.

Citizens Financial Group Company Profile

Citizens Financial Group, Inc. operates as the bank holding company for Citizens Bank, National Association and Citizens Bank of Pennsylvania that provide retail and commercial banking products and services in the United States. The company operates in two segments, Consumer Banking and Commercial Banking. The Consumer Banking segment offers traditional banking products and services, including checking, savings, home loans, education loans, credit cards, business loans, and unsecured product finance and personal loans, as well as wealth management and investment services to retail customers and small businesses. This segment also provides indirect auto finance for new and used vehicles through auto dealerships. The Commercial Banking segment offers various financial products and solutions, such as loans, leases, trade financing, deposits, cash management, commercial cards, foreign exchange, interest rate risk management, corporate finance, and capital markets advisory capabilities. It serves government banking, not-for-profit, healthcare, technology, professionals, oil and gas, asset finance, franchise finance, asset-based lending, commercial real estate, private equity, and sponsor finance industries focusing on middle-market companies, large corporations, and institutions. Citizens Financial Group, Inc. operates approximately 1,150 branches in 11 states across the New England, Mid-Atlantic, and Midwest regions, as well as through online, telephone, and mobile banking platforms; and maintains approximately 130 retail and commercial non-branch offices located in its banking footprint and in other states, and the District of Columbia. The company was formerly known as RBS Citizens Financial Group, Inc. and changed its name to Citizens Financial Group, Inc. in April 2014. Citizens Financial Group, Inc. was founded in 1828 and is headquartered in Providence, Rhode Island.

HopFed Bancorp Company Profile

HopFed Bancorp, Inc. operates as the bank holding company for Heritage Bank USA, Inc. that provides various banking products and services. The company accepts various deposit products, including money market accounts, passbook savings accounts, individual retirement accounts, certificates of deposit, and time deposits, as well as non-interest bearing, savings, and interest bearing checking accounts. It also provides loans, such as one-to-four family first mortgages, home equity lines of credit, junior liens, multi-family loans, construction and land loans, non-residential real estate loans, and farm loans, as well as secured and unsecured consumer and commercial loans. In addition, the company owns a low income senior citizen housing facility that offers apartments for rent in Bowling Green, Kentucky. Further, it invests in the United States government agency securities, municipal and corporate bonds, collateralized mortgages obligations, and mortgage-backed securities. As of March 21, 2018, the company operated 18 offices in western Kentucky and middle Tennessee; Heritage Bank Wealth Management of Murray, Kentucky, Hopkinsville, Kentucky, Kingston Springs, Tennessee, and Clarksville, Tennessee; and Heritage Mortgage Services of Clarksville, Tennessee, as well as loan production offices in Nashville, Tennessee, and Brentwood, Tennessee. HopFed Bancorp, Inc. was founded in 1879 and is headquartered in Hopkinsville, Kentucky.

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