Analyzing Midland States Bancorp (MSBI) and Home BancShares (HOMB)

Home BancShares (NASDAQ: HOMB) and Midland States Bancorp (NASDAQ:MSBI) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, valuation, dividends, risk, profitability and earnings.

Insider and Institutional Ownership

49.9% of Home BancShares shares are owned by institutional investors. Comparatively, 46.6% of Midland States Bancorp shares are owned by institutional investors. 11.3% of Home BancShares shares are owned by insiders. Comparatively, 14.9% of Midland States Bancorp shares are owned 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.

Valuation and Earnings

This table compares Home BancShares and Midland States Bancorp’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Home BancShares $523.59 million 7.09 $177.14 million $1.13 18.93
Midland States Bancorp $193.31 million 3.03 $31.54 million $1.54 19.90

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

Volatility and Risk

Home BancShares has a beta of 1.17, suggesting that its stock price is 17% more volatile than the S&P 500. Comparatively, Midland States Bancorp has a beta of 2.3, suggesting that its stock price is 130% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and price targets for Home BancShares and Midland States Bancorp, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Home BancShares 0 5 2 0 2.29
Midland States Bancorp 0 0 1 0 3.00

Home BancShares presently has a consensus price target of $27.75, indicating a potential upside of 29.73%. Midland States Bancorp has a consensus price target of $42.00, indicating a potential upside of 37.03%. Given Midland States Bancorp’s stronger consensus rating and higher probable upside, analysts clearly believe Midland States Bancorp is more favorable than Home BancShares.

Dividends

Home BancShares pays an annual dividend of $0.44 per share and has a dividend yield of 2.1%. Midland States Bancorp pays an annual dividend of $0.80 per share and has a dividend yield of 2.6%. Home BancShares pays out 38.9% of its earnings in the form of a dividend. Midland States Bancorp pays out 51.9% 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.

Profitability

This table compares Home BancShares and Midland States Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Home BancShares 28.19% 12.00% 1.70%
Midland States Bancorp 11.90% 10.77% 1.07%

Summary

Home BancShares beats Midland States Bancorp on 10 of the 16 factors compared between the two stocks.

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 September 26, 2017, the Company conducted business principally through 76 branches in Arkansas, 89 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.

About Midland States Bancorp

Midland States Bancorp, Inc. is a diversified financial holding company. The Company’s banking subsidiary is Midland States Bank (the Bank). The Company’s principal business activity has been lending to and accepting deposits from individuals, businesses, municipalities and other entities. The Company’s segments include Banking, which provides a range of financial products and services to consumers and businesses, including loan products; commercial equipment leasing; mortgage loan sales and servicing; letters of credit; various types of deposit products, including checking, savings and time deposit accounts; merchant services, and corporate treasury management services; Commercial Federal Housing Administration (FHA) Origination and Servicing, which provides for the origination and servicing of government sponsored mortgages for multifamily and healthcare facilities, and Other, which includes the operating results of the Company and its wealth management business unit.

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