Hilltop Holdings (NYSE: HTH) and Stewart Information Services Corporation (NYSE:STC) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, earnings, valuation, analyst recommendations, institutional ownership, profitabiliy and dividends.

Institutional & Insider Ownership

55.8% of Hilltop Holdings shares are held by institutional investors. Comparatively, 93.4% of Stewart Information Services Corporation shares are held by institutional investors. 22.6% of Hilltop Holdings shares are held by company insiders. Comparatively, 2.2% of Stewart Information Services Corporation shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Hilltop Holdings and Stewart Information Services Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hilltop Holdings 8.33% 7.81% 1.14%
Stewart Information Services Corporation 3.27% 9.77% 4.77%

Dividends

Hilltop Holdings pays an annual dividend of $0.24 per share and has a dividend yield of 0.9%. Stewart Information Services Corporation pays an annual dividend of $1.20 per share and has a dividend yield of 3.0%. Hilltop Holdings pays out 16.2% of its earnings in the form of a dividend. Stewart Information Services Corporation pays out 43.0% 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.

Volatility & Risk

Hilltop Holdings has a beta of 1.03, indicating that its share price is 3% more volatile than the S&P 500. Comparatively, Stewart Information Services Corporation has a beta of 0.81, indicating that its share price is 19% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations and price targets for Hilltop Holdings and Stewart Information Services Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hilltop Holdings 0 3 1 0 2.25
Stewart Information Services Corporation 3 1 0 0 1.25

Hilltop Holdings presently has a consensus target price of $29.10, indicating a potential upside of 13.23%. Stewart Information Services Corporation has a consensus target price of $43.50, indicating a potential upside of 8.56%. Given Hilltop Holdings’ stronger consensus rating and higher probable upside, equities analysts clearly believe Hilltop Holdings is more favorable than Stewart Information Services Corporation.

Valuation and Earnings

This table compares Hilltop Holdings and Stewart Information Services Corporation’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Hilltop Holdings $1.64 billion 1.54 $145.82 million $1.48 17.36
Stewart Information Services Corporation $2.02 billion 0.47 $145.76 million $2.79 14.36

Hilltop Holdings has higher revenue, but lower earnings than Stewart Information Services Corporation. Stewart Information Services Corporation is trading at a lower price-to-earnings ratio than Hilltop Holdings, indicating that it is currently the more affordable of the two stocks.

Summary

Hilltop Holdings beats Stewart Information Services Corporation on 10 of the 16 factors compared between the two stocks.

Hilltop Holdings Company Profile

Hilltop Holdings Inc. is a financial holding Company. The Company provides business and consumer banking services from offices located throughout Texas through PlainsCapital Bank (the Bank). It has three operating business units, which include PlainsCapital Corporation (PCC) (banking and mortgage origination), Hilltop Securities Holdings LLC (Securities Holdings) (broker-dealer) and PlainsCapital Company (NLC) (insurance). The PCC unit includes the Bank, and its subsidiary, PrimeLending (collectively referred to herein as PlainsCapital), while the Securities Holdings unit includes its broker-dealer operations transferred from the PCC unit, and two entities acquired in the SWS Group, Inc. (SWS) Merger, Hilltop Securities Inc. (Hilltop Securities) and Hilltop Securities Independent Network Inc. (HTS Independent Network). Its segments include Banking, Broker-Dealer, mortgage origination, insurance and Corporate.

Stewart Information Services Corporation Company Profile

Stewart Information Services Corporation is a global real estate services company. The Company is engaged in offering products and services through its direct operations, network of Stewart Trusted Providers and family of companies. The Company operates through two segments: title insurance and ancillary services and corporate. Title insurance and related services (title) segment provides services needed to transfer title to property in a real estate transaction and includes services, such as searching, examining, closing and insuring the condition of the title to the property. The ancillary services and corporate segment provides appraisal and valuation services, document management, recording and call center-related services offered to mortgage lenders and servicers, mortgage brokers and mortgage investors. Its primary international operations are located in Canada, the United Kingdom, Australia and Central Europe.

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