Critical Review: Regions Financial (NYSE:RF) versus Home Bancorp (NASDAQ:HBCP)
by Sarita Garza · The Markets DailyRegions Financial (NYSE:RF – Get Free Report) and Home Bancorp (NASDAQ:HBCP – Get Free Report) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, profitability, institutional ownership, risk, dividends, valuation and earnings.
Risk & Volatility
Regions Financial has a beta of 1.03, suggesting that its stock price is 3% more volatile than the S&P 500. Comparatively, Home Bancorp has a beta of 0.53, suggesting that its stock price is 47% less volatile than the S&P 500.
Analyst Recommendations
This is a breakdown of current ratings and price targets for Regions Financial and Home Bancorp, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Regions Financial | 3 | 9 | 6 | 0 | 2.17 |
| Home Bancorp | 0 | 2 | 3 | 0 | 2.60 |
Regions Financial presently has a consensus price target of $29.75, suggesting a potential upside of 8.12%. Home Bancorp has a consensus price target of $63.00, suggesting a potential downside of 2.90%. Given Regions Financial’s higher probable upside, analysts plainly believe Regions Financial is more favorable than Home Bancorp.
Dividends
Regions Financial pays an annual dividend of $1.06 per share and has a dividend yield of 3.9%. Home Bancorp pays an annual dividend of $1.24 per share and has a dividend yield of 1.9%. Regions Financial pays out 46.3% of its earnings in the form of a dividend. Home Bancorp pays out 21.1% 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. Regions Financial has increased its dividend for 12 consecutive years and Home Bancorp has increased its dividend for 10 consecutive years. Regions Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Valuation & Earnings
This table compares Regions Financial and Home Bancorp”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Regions Financial | $9.61 billion | 2.47 | $2.16 billion | $2.29 | 12.02 |
| Home Bancorp | $209.23 million | 2.43 | $46.06 million | $5.87 | 11.05 |
Regions Financial has higher revenue and earnings than Home Bancorp. Home Bancorp is trading at a lower price-to-earnings ratio than Regions Financial, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
79.4% of Regions Financial shares are owned by institutional investors. Comparatively, 49.4% of Home Bancorp shares are owned by institutional investors. 0.3% of Regions Financial shares are owned by company insiders. Comparatively, 7.9% of Home Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Profitability
This table compares Regions Financial and Home Bancorp’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Regions Financial | 22.44% | 12.55% | 1.37% |
| Home Bancorp | 22.01% | 11.03% | 1.32% |
Summary
Regions Financial beats Home Bancorp on 13 of the 17 factors compared between the two stocks.
About Regions Financial
Regions Financial Corporation, a financial holding company, provides banking and bank-related services to individual and corporate customers. It operates through three segments: Corporate Bank, Consumer Bank, and Wealth Management. The Corporate Bank segment offers commercial banking services, such as commercial and industrial, commercial real estate, and investor real estate lending; equipment lease financing; deposit products; and securities underwriting and placement, loan syndication and placement, foreign exchange, derivatives, merger and acquisition, and other advisory services. It serves corporate, middle market, and commercial real estate developers and investors. The Consumer Bank segment provides consumer banking products and services related to residential first mortgages, home equity lines and loans, consumer credit cards, and other consumer loans, as well as deposits. The Wealth Management segment offers credit related products, and retirement and savings solutions; and trust and investment management, asset management, and estate planning services to individuals, businesses, governmental institutions, and non-profit entities. It also provides investment and insurance products; low-income housing tax credit corporate fund syndication services; and other specialty financing services. The company was founded in 1971 and is headquartered in Birmingham, Alabama.
About Home Bancorp
Home Bancorp, Inc. operates as the bank holding company for Home Bank, National Association that provides various banking products and services in Louisiana, Mississippi, and Texas. It offers deposit products, including interest-bearing and noninterest-bearing checking, money market, savings, NOW, and certificates of deposit accounts. The company also provides various loan products comprising one-to four-family first mortgage loans, home equity loans and lines, commercial real estate loans, construction and land loans, multi-family residential loans, commercial and industrial loans, and consumer loans. In addition, it invests in securities; and offers credit cards and online banking services. Home Bancorp, Inc. was founded in 1908 and is headquartered in Lafayette, Louisiana.