First Guaranty Bancshares (NASDAQ:FGBI) versus Hilltop (NYSE:HTH) Critical Review

Hilltop (NYSE:HTH) and First Guaranty Bancshares (NASDAQ:FGBI) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, valuation, profitability, analyst recommendations, dividends, earnings and institutional ownership.

Earnings & Valuation

This table compares Hilltop and First Guaranty Bancshares”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hilltop	$1.20 billion	1.74	$165.59 million	$2.40	15.32
First Guaranty Bancshares	$221.76 million	0.88	-$56.02 million	$1.28	9.20

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

Institutional & Insider Ownership

57.1% of Hilltop shares are owned by institutional investors. Comparatively, 39.5% of First Guaranty Bancshares shares are owned by institutional investors. 5.4% of Hilltop shares are owned by insiders. Comparatively, 49.4% of First Guaranty Bancshares shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Risk & Volatility

Hilltop has a beta of 0.88, meaning that its share price is 12% less volatile than the S&P 500. Comparatively, First Guaranty Bancshares has a beta of 0.44, meaning that its share price is 56% less volatile than the S&P 500.

Profitability

This table compares Hilltop and First Guaranty Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hilltop	9.08%	6.51%	0.88%
First Guaranty Bancshares	9.17%	10.67%	0.52%

Dividends

Hilltop pays an annual dividend of $0.88 per share and has a dividend yield of 2.4%. First Guaranty Bancshares pays an annual dividend of $0.04 per share and has a dividend yield of 0.3%. Hilltop pays out 36.7% of its earnings in the form of a dividend. First Guaranty Bancshares pays out 3.1% 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. Hilltop has raised its dividend for 8 consecutive years. Hilltop is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current ratings and price targets for Hilltop and First Guaranty Bancshares, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hilltop	1	3	1	0	2.00
First Guaranty Bancshares	1	1	0	0	1.50

Hilltop presently has a consensus price target of $42.00, indicating a potential upside of 14.26%. Given Hilltop’s stronger consensus rating and higher probable upside, research analysts clearly believe Hilltop is more favorable than First Guaranty Bancshares.

Summary

Hilltop beats First Guaranty Bancshares on 13 of the 17 factors compared between the two stocks.

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.

About First Guaranty Bancshares

First Guaranty Bancshares, Inc. operates as the holding company for First Guaranty Bank that provides commercial banking services in Louisiana and Texas. It offers various deposit products, including personal and business checking, savings, money market, and demand accounts, as well as time deposits to consumers, small businesses, and municipalities. The company provides loans, such as non-farm, non-residential loans secured by real estate, commercial and industrial loans, one- to four-family residential loans, multifamily loans, construction and land development loans, agricultural loans, farmland loans, and consumer and other loans to small to medium-sized businesses and professionals, and individuals. In addition, it offers a range of consumer services, including credit cards, mobile deposit capture, safe deposit boxes, official checks, online and mobile banking, automated teller machines, and online bill pay; provides additional solutions, such as merchant services, remote deposit capture, and lockbox services to business customers; and invests a portion of its assets in securities issued by the United States Government and its agencies, state and municipal obligations, corporate debt securities, mutual funds, and equity securities, as well as invests in mortgage-backed securities primarily issued or guaranteed by United States Government agencies or enterprises. First Guaranty Bancshares, Inc. was founded in 1934 and is headquartered in Hammond, Louisiana.