National Bankshares (NASDAQ:NKSH) and Hilltop (NYSE:HTH) Head-To-Head Survey

National Bankshares (NASDAQ:NKSH) and Hilltop (NYSE:HTH) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, profitability, institutional ownership, risk, dividends, valuation and earnings.

Insider and Institutional Ownership

29.7% of National Bankshares shares are owned by institutional investors. Comparatively, 57.1% of Hilltop shares are owned by institutional investors. 3.2% of National Bankshares shares are owned by company insiders. Comparatively, 29.9% of Hilltop shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

National Bankshares pays an annual dividend of $1.56 per share and has a dividend yield of 4.2%. Hilltop pays an annual dividend of $0.80 per share and has a dividend yield of 2.1%. National Bankshares pays out 62.9% of its earnings in the form of a dividend. Hilltop pays out 30.2% 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. Hilltop has raised its dividend for 8 consecutive years.

Volatility & Risk

National Bankshares has a beta of 0.72, meaning that its share price is 28% less volatile than the S&P 500. Comparatively, Hilltop has a beta of 0.94, meaning that its share price is 6% less volatile than the S&P 500.

Valuation & Earnings

This table compares National Bankshares and Hilltop”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
National Bankshares	$55.56 million	4.30	$15.83 million	$2.48	15.15
Hilltop	$1.22 billion	1.83	$165.59 million	$2.65	14.19

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

Profitability

This table compares National Bankshares and Hilltop’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
National Bankshares	18.55%	9.78%	0.93%
Hilltop	10.19%	7.47%	1.06%

Analyst Ratings

This is a summary of recent ratings and recommmendations for National Bankshares and Hilltop, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
National Bankshares	0	1	0	0	2.00
Hilltop	0	3	1	1	2.60

Hilltop has a consensus price target of $37.50, indicating a potential downside of 0.31%. Given Hilltop’s stronger consensus rating and higher probable upside, analysts clearly believe Hilltop is more favorable than National Bankshares.

Summary

Hilltop beats National Bankshares on 13 of the 18 factors compared between the two stocks.

About National Bankshares

National Bankshares, Inc. operates as the bank holding company for the National Bank of Blacksburg that provides retail and commercial banking products and services to individuals, businesses, non-profits, and local governments. The company accepts interest-bearing and non-interest-bearing demand deposit accounts, money market deposit accounts, savings accounts, certificates of deposit, health savings accounts, and individual retirement accounts. Its loan products include commercial and agricultural, commercial real estate, residential real estate, home equity, and various consumer loan products, as well as loans for the construction of commercial and residential properties. The company also provides business and consumer debit and credit cards; letters of credit, night depository services, safe deposit boxes, utility payment services, and automatic funds transfer; wealth management, trust, and estate services; non-deposit investment and insurance products; and telephone, mobile, and Internet banking services. The company was founded in 1891 and is headquartered in Blacksburg, Virginia.

About Hilltop

Hilltop Holdings Inc. provides business and consumer banking services. It operates through three segments: Banking, Broker-Dealer, and Mortgage Origination. The Banking segment offers savings, checking, interest-bearing checking, and money market accounts; certificates of deposit; lines and letters of credit, home improvement and equity loans, loans for purchasing and carrying securities, term, agricultural and commercial real estate, equipment loans, and other lending products; and mortgage, commercial and industrial loans, and term and construction finance. It also provides treasury management, asset management, check cards, safe deposit boxes, online banking, bill pay, and overdraft privilege services; and estate planning, management and administration, investment portfolio management, employee benefit accounts, and individual retirement accounts services, as well as automated teller machines. The Broker-Dealer segment offers public finance services that assist public entities in originating, syndicating, and distributing securities of municipalities and political subdivisions; specialized advisory and investment banking services; advice and guidance to arbitrage rebate compliance, portfolio management, and local government investment pool administration; advisory services and products for derivatives and commodities; agricultural insurance; and sells, trades in, and underwrites U.S. government and government agency bonds, corporate bonds, and municipal bonds; mortgage-backed, asset-backed, and commercial mortgage-backed securities and structured products; and provides asset and liability management advisory, clearing, retail, and securities lending services. The Mortgage Origination segment offers fixed and adjustable rate mortgages, jumbo, new construction, Federal Housing Administration, Veterans Affairs, and United States Department of Agriculture loans. Hilltop Holdings Inc. was incorporated in 1998 and is based in Dallas, Texas.