Head to Head Analysis: Hilltop (NYSE:HTH) and TFS Financial (NASDAQ:TFSL)

Hilltop (NYSE:HTH) and TFS Financial (NASDAQ:TFSL) are both mid-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, risk, institutional ownership, analyst recommendations, earnings, profitability and dividends.

Dividends

Hilltop pays an annual dividend of $0.88 per share and has a dividend yield of 2.4%. TFS Financial pays an annual dividend of $1.27 per share and has a dividend yield of 7.8%. Hilltop pays out 36.7% of its earnings in the form of a dividend. TFS Financial pays out 352.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Hilltop has raised its dividend for 8 consecutive years.

Volatility & Risk

Hilltop has a beta of 0.88, indicating that its share price is 12% less volatile than the S&P 500. Comparatively, TFS Financial has a beta of 0.71, indicating that its share price is 29% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Hilltop and TFS Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hilltop	1	3	1	0	2.00
TFS Financial	0	3	1	0	2.25

Hilltop presently has a consensus price target of $39.00, suggesting a potential upside of 8.01%. TFS Financial has a consensus price target of $18.00, suggesting a potential upside of 9.89%. Given TFS Financial’s stronger consensus rating and higher probable upside, analysts plainly believe TFS Financial is more favorable than Hilltop.

Insider & Institutional Ownership

57.1% of Hilltop shares are held by institutional investors. Comparatively, 9.8% of TFS Financial shares are held by institutional investors. 5.4% of Hilltop shares are held by insiders. Comparatively, 0.7% of TFS Financial shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Hilltop and TFS Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hilltop	9.08%	6.51%	0.88%
TFS Financial	12.00%	5.23%	0.57%

Valuation & Earnings

This table compares Hilltop and TFS Financial”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hilltop	$1.63 billion	1.26	$165.59 million	$2.40	15.05
TFS Financial	$839.24 million	5.47	$100.72 million	$0.36	45.50

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

Summary

Hilltop beats TFS Financial on 10 of the 16 factors compared between the two stocks.

About Hilltop

Hilltop Holdings Inc. is a Dallas-based financial holding company with businesses in banking, mortgage lending and securities. Its operations primarily serve customers in Texas and other U.S. markets. Through PlainsCapital Bank, Hilltop provides commercial and consumer banking services, including deposit accounts, loans and treasury management. PrimeLending originates residential mortgages, while HilltopSecurities offers investment banking, municipal finance, brokerage and wealth management services.

About TFS Financial

TFS Financial Inc. is the holding company for Third Federal Savings and Loan Association of Cleveland, a savings and mortgage lender founded in 1938. The company focuses on serving individual and family banking needs. Third Federal offers residential mortgage loans, home equity loans and lines of credit, along with deposit products such as savings accounts, checking accounts and certificates of deposit. Its lending business centers on home financing. The company serves customers through a branch network concentrated in Ohio and Florida, as well as through its other banking and lending channels.