Hilltop (NYSE:HTH) vs. Pinnacle Bankshares (OTCMKTS:PPBN) Critical Contrast

Pinnacle Bankshares (OTCMKTS:PPBN) and Hilltop (NYSE:HTH) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, profitability, risk, valuation, earnings, institutional ownership and dividends.

Institutional and Insider Ownership

3.8% of Pinnacle Bankshares shares are owned by institutional investors. Comparatively, 57.1% of Hilltop shares are owned by institutional investors. 6.5% of Pinnacle Bankshares shares are owned by insiders. Comparatively, 5.4% of Hilltop shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Risk and Volatility

Pinnacle Bankshares has a beta of 0.27, meaning that its share price is 73% less volatile than the S&P 500. Comparatively, Hilltop has a beta of 0.88, meaning that its share price is 12% less volatile than the S&P 500.

Valuation and Earnings

This table compares Pinnacle Bankshares and Hilltop”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pinnacle Bankshares	$59.05 million	2.07	$10.77 million	$5.21	10.84
Hilltop	$1.63 billion	1.37	$165.59 million	$2.64	14.46

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

Dividends

Pinnacle Bankshares pays an annual dividend of $1.20 per share and has a dividend yield of 2.1%. Hilltop pays an annual dividend of $0.80 per share and has a dividend yield of 2.1%. Pinnacle Bankshares pays out 23.0% 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. Hilltop has raised its dividend for 8 consecutive years. Pinnacle Bankshares is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Pinnacle Bankshares and Hilltop’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Pinnacle Bankshares	19.32%	13.24%	1.10%
Hilltop	10.13%	7.32%	1.03%

Analyst Recommendations

This is a breakdown of current ratings and price targets for Pinnacle Bankshares and Hilltop, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pinnacle Bankshares	0	0	0	0	0.00
Hilltop	0	2	1	1	2.75

Hilltop has a consensus target price of $37.50, suggesting a potential downside of 1.78%. Given Hilltop’s stronger consensus rating and higher possible upside, analysts clearly believe Hilltop is more favorable than Pinnacle Bankshares.

Summary

Hilltop beats Pinnacle Bankshares on 10 of the 18 factors compared between the two stocks.

About Pinnacle Bankshares

Pinnacle Bankshares Corporation operates as the bank holding company for First National Bank that provides a range of commercial and retail banking products and services. The company accepts checking accounts, savings and time deposits, individual retirement accounts, certificates of deposit, and money market accounts. Its loan products include residential and commercial mortgage loans, home equity loans, consumer installment loans, agricultural loans, investment loans, small business loans, commercial lines of credit, and letters of credit. The company also provides credit cards; insurance products, including property and casualty, life, and health; investment and annuity products; and overdraft protection, merchant bankcard processing, cash management, remote deposit capture, night drop, safe deposit boxes, and notary services, as well as telephone, mobile, and online banking services. It operates branches in Amherst County, Bedford County, Campbell County, Pittsylvania County; and the city of Danville, Lynchburg and Charlottesville. The company was founded in 1908 and is headquartered in Altavista, 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.