Comparing Bank of the James Financial Group (NASDAQ:BOTJ) & Hilltop (NYSE:HTH)

Bank of the James Financial Group (NASDAQ:BOTJ) and Hilltop (NYSE:HTH) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, risk, analyst recommendations, profitability, valuation and dividends.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Bank of the James Financial Group and Hilltop, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bank of the James Financial Group	0	1	0	0	2.00
Hilltop	0	2	1	1	2.75

Hilltop has a consensus price target of $37.50, suggesting a potential downside of 0.71%. Given Hilltop’s stronger consensus rating and higher possible upside, analysts plainly believe Hilltop is more favorable than Bank of the James Financial Group.

Volatility & Risk

Bank of the James Financial Group has a beta of 0.18, suggesting that its stock price is 82% less volatile than the S&P 500. Comparatively, Hilltop has a beta of 0.89, suggesting that its stock price is 11% less volatile than the S&P 500.

Institutional & Insider Ownership

18.5% of Bank of the James Financial Group shares are owned by institutional investors. Comparatively, 57.1% of Hilltop shares are owned by institutional investors. 11.9% of Bank of the James Financial Group shares are owned by insiders. Comparatively, 29.9% of Hilltop shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

Bank of the James Financial Group pays an annual dividend of $0.40 per share and has a dividend yield of 1.7%. Hilltop pays an annual dividend of $0.80 per share and has a dividend yield of 2.1%. Bank of the James Financial Group pays out 16.5% of its earnings in the form of a dividend. Hilltop pays out 30.3% 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. Bank of the James Financial Group has raised its dividend for 5 consecutive years and 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.

Profitability

This table compares Bank of the James Financial Group and Hilltop’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bank of the James Financial Group	17.17%	14.37%	1.07%
Hilltop	10.13%	7.32%	1.03%

Valuation and Earnings

This table compares Bank of the James Financial Group and Hilltop”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bank of the James Financial Group	$62.51 million	1.69	$9.02 million	$2.42	9.64
Hilltop	$1.63 billion	1.36	$165.59 million	$2.64	14.31

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

Summary

Hilltop beats Bank of the James Financial Group on 13 of the 18 factors compared between the two stocks.

About Bank of the James Financial Group

Bank of the James Financial Group, Inc. operates as the bank holding company for Bank of the James that provides general retail and commercial banking services to individuals, businesses, associations and organizations, and governmental authorities in Virginia, the United States. It offers checking, savings, individual retirement, and health care saving accounts, as well as other time deposits, including money market accounts and certificates of deposit. The company also provides loans to small- and medium-sized businesses for the purchases of equipment, facilities upgrades, inventory acquisition, and various working capital purposes; commercial and residential construction and development loans; commercial real estate mortgage loans; residential mortgage loans; and secured and unsecured consumer loans, such as lines of credit and overdraft lines of credit, as well as personal, automobile, installment, demand, and home equity loans for personal, family, or household purposes. In addition, it offers other banking services, including safe deposit boxes, traveler's checks, direct deposit of payroll and social security checks, automatic drafts for various accounts, treasury management, and credit card merchant services. Further, the company provides mortgage banking; investment advisory services; securities brokerage and investment services; and telephone and internet banking services comprising online bill pay, as well as acts as an agent for insurance and annuity products. The company was founded in 1999 and is headquartered in Lynchburg, 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.