United Bancorporation of Alabama (OTCMKTS:UBAB) versus Home BancShares (NYSE:HOMB) Critical Contrast

Home BancShares (NYSE:HOMB) and United Bancorporation of Alabama (OTCMKTS:UBAB) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, dividends, profitability, analyst recommendations, valuation, earnings and risk.

Risk & Volatility

Home BancShares has a beta of 0.68, meaning that its share price is 32% less volatile than the S&P 500. Comparatively, United Bancorporation of Alabama has a beta of 0.45, meaning that its share price is 55% less volatile than the S&P 500.

Institutional and Insider Ownership

67.3% of Home BancShares shares are held by institutional investors. Comparatively, 5.5% of United Bancorporation of Alabama shares are held by institutional investors. 6.4% 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 stock will outperform the market over the long term.

Profitability

This table compares Home BancShares and United Bancorporation of Alabama’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Home BancShares	32.10%	11.25%	2.11%
United Bancorporation of Alabama	22.47%	13.65%	1.42%

Dividends

Home BancShares pays an annual dividend of $0.84 per share and has a dividend yield of 2.7%. United Bancorporation of Alabama pays an annual dividend of $1.42 per share and has a dividend yield of 2.4%. Home BancShares pays out 34.7% of its earnings in the form of a dividend. United Bancorporation of Alabama pays out 25.4% 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. Home BancShares has increased its dividend for 15 consecutive years. Home BancShares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current recommendations for Home BancShares and United Bancorporation of Alabama, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Home BancShares	0	4	3	0	2.43
United Bancorporation of Alabama	0	1	0	0	2.00

Home BancShares presently has a consensus target price of $32.80, indicating a potential upside of 6.44%. Given Home BancShares’ stronger consensus rating and higher probable upside, research analysts plainly believe Home BancShares is more favorable than United Bancorporation of Alabama.

Earnings & Valuation

This table compares Home BancShares and United Bancorporation of Alabama”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Home BancShares	$1.48 billion	4.20	$475.44 million	$2.42	12.73
United Bancorporation of Alabama	$89.83 million	2.04	$19.67 million	$5.60	10.67

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

Summary

Home BancShares beats United Bancorporation of Alabama on 14 of the 17 factors compared between the two stocks.

About Home BancShares

Home Bancshares, Inc. (Conway, AR) operates as the bank holding company for Centennial Bank that provides commercial and retail banking, and related financial services to businesses, real estate developers and investors, individuals, and municipalities. Its deposit products include checking, savings, and money market accounts, as well as certificates of deposit. The company's loan portfolio comprises non-farm/non-residential real estate, construction/land development, residential mortgage, consumer, agricultural, and commercial and industrial loans. It provides internet banking, mobile banking and voice response information, cash management, overdraft protection, direct deposit, and automatic account transfer services, as well as safe deposit boxes and the United States savings bonds. In addition, the company writes policies for commercial and personal lines of business, including insurance for property, casualty, life, health, and employee benefits. It operates through branches in Arkansas, Florida, Alabama, Texas, and New York City. Home Bancshares, Inc. (Conway, AR) was founded in 1998 and is headquartered in Conway, Arkansas.

About United Bancorporation of Alabama

United Bancorporation of Alabama, Inc. operates as the bank holding company for United Bank that provides banking services. The company offers checking and savings accounts, certificates of deposit, individual retirement accounts, small business programs, business solutions, merchant services, and cash management services. It also provides various lending services, such as personal loans, business loans, lines of credit, and equipment loans; real estate loans for the agricultural community and working lines of credit; and overdraft services. In addition, the company offers debit cards, prepaid cards, Visa credit cards, gift cards, and safe deposit boxes. Further, it provides check cashing, convenience, remote deposit, mobile check deposit, personal storage compartments, Web payment options, insurance products, investment and brokerage, and online and mobile banking services. United Bancorporation of Alabama, Inc. was founded in 1904 and is based in Atmore, Alabama.