Central Valley Community Bancorp (NASDAQ: CVCY) and Home BancShares (NASDAQ:HOMB) are both finance companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, risk, valuation, dividends, profitability, analyst recommendations and institutional ownership.

Profitability

This table compares Central Valley Community Bancorp and Home BancShares’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Central Valley Community Bancorp 23.78% 8.94% 1.06%
Home BancShares 33.97% 13.77% 1.85%

Risk & Volatility

Central Valley Community Bancorp has a beta of 0.19, suggesting that its share price is 81% less volatile than the S&P 500. Comparatively, Home BancShares has a beta of 1.19, suggesting that its share price is 19% more volatile than the S&P 500.

Institutional and Insider Ownership

43.9% of Central Valley Community Bancorp shares are held by institutional investors. Comparatively, 60.6% of Home BancShares shares are held by institutional investors. 21.6% of Central Valley Community Bancorp shares are held by company insiders. Comparatively, 11.3% of Home BancShares shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Central Valley Community Bancorp and Home BancShares’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Central Valley Community Bancorp $62.90 million 3.92 $15.14 million $1.24 16.28
Home BancShares $500.41 million 6.55 $191.74 million $1.34 17.08

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

Analyst Recommendations

This is a breakdown of current ratings and price targets for Central Valley Community Bancorp and Home BancShares, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Central Valley Community Bancorp 0 1 0 0 2.00
Home BancShares 0 3 3 0 2.50

Central Valley Community Bancorp presently has a consensus price target of $24.00, indicating a potential upside of 18.87%. Home BancShares has a consensus price target of $28.70, indicating a potential upside of 25.38%. Given Home BancShares’ stronger consensus rating and higher possible upside, analysts plainly believe Home BancShares is more favorable than Central Valley Community Bancorp.

Dividends

Central Valley Community Bancorp pays an annual dividend of $0.24 per share and has a dividend yield of 1.2%. Home BancShares pays an annual dividend of $0.44 per share and has a dividend yield of 1.9%. Central Valley Community Bancorp pays out 19.4% of its earnings in the form of a dividend. Home BancShares pays out 32.8% 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.

Summary

Home BancShares beats Central Valley Community Bancorp on 14 of the 16 factors compared between the two stocks.

About Central Valley Community Bancorp

Central Valley Community Bancorp is a bank holding company, which operates through its subsidiary, Central Valley Community Bank (the Bank). The Company’s principal business is to provide, through its banking subsidiary, financial services in its primary market area in California. It serves over seven contiguous counties in California’s central valley, including Fresno County, Madera County, Merced County, Sacramento County, San Joaquin County, Stanislaus County, and Tulare County, and surrounding areas through the Bank. The Bank conducts a commercial banking business, which includes accepting demand, savings and time deposits and making commercial, real estate and consumer loans. It provides domestic and international wire transfer services and provides safe deposit boxes and other customary banking services. It operates over 20 full-service banking offices in Clovis, Exeter, Fresno, Kerman, Lodi, Madera, Merced, Modesto, Oakhurst, Prather, Sacramento, Stockton, Tracy and Visalia.

About Home BancShares

Home BancShares, Inc. is a bank holding company. The Company is engaged in providing a range of commercial and retail banking, and related financial services to businesses, real estate developers and investors, individuals and municipalities through its community bank subsidiary, Centennial Bank (the Bank). It operates through community banking segment. It offers a range of products and services, including Internet banking, mobile banking and voice response information, cash management, overdraft protection, direct deposit, safe deposit boxes, the United States savings bonds and automatic account transfers. The Bank has locations in Arkansas, Florida, South Alabama and New York City. As of December 31, 2016, the Company conducted business principally through 76 branches in Arkansas, 59 branches in Florida, six branches in Alabama and one branch in New York City. It originates loans secured by single and multi-family real estate, residential construction and commercial buildings.

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