Critical Review: SmartFinancial (NASDAQ:SMBK) and First Horizon (NYSE:FHN)

First Horizon (NYSE:FHN) and SmartFinancial (NASDAQ:SMBK) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, earnings, risk, profitability, valuation and dividends.

Insider & Institutional Ownership

80.3% of First Horizon shares are owned by institutional investors. Comparatively, 58.8% of SmartFinancial shares are owned by institutional investors. 0.9% of First Horizon shares are owned by company insiders. Comparatively, 7.7% of SmartFinancial shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent recommendations and price targets for First Horizon and SmartFinancial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Horizon	0	6	9	0	2.60
SmartFinancial	0	4	0	1	2.40

First Horizon presently has a consensus target price of $22.23, suggesting a potential upside of 13.06%. SmartFinancial has a consensus target price of $30.70, suggesting a potential downside of 4.64%. Given First Horizon’s stronger consensus rating and higher possible upside, equities research analysts plainly believe First Horizon is more favorable than SmartFinancial.

Valuation and Earnings

This table compares First Horizon and SmartFinancial”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Horizon	$3.10 billion	3.27	$775.00 million	$1.36	14.46
SmartFinancial	$171.50 million	3.19	$36.14 million	$2.14	15.04

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

Profitability

This table compares First Horizon and SmartFinancial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Horizon	15.38%	10.10%	1.07%
SmartFinancial	12.67%	7.33%	0.71%

Dividends

First Horizon pays an annual dividend of $0.60 per share and has a dividend yield of 3.1%. SmartFinancial pays an annual dividend of $0.32 per share and has a dividend yield of 1.0%. First Horizon pays out 44.1% of its earnings in the form of a dividend. SmartFinancial pays out 15.0% 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

First Horizon has a beta of 0.86, indicating that its stock price is 14% less volatile than the S&P 500. Comparatively, SmartFinancial has a beta of 0.67, indicating that its stock price is 33% less volatile than the S&P 500.

Summary

First Horizon beats SmartFinancial on 12 of the 17 factors compared between the two stocks.

About First Horizon

First Horizon Corporation operates as the bank holding company for First Horizon Bank that provides various financial services. The company operates through Regional Banking and Specialty Banking segments. It offers general banking services for consumers, businesses, financial institutions, and governments. The company also accepts deposits; provides underwriting services for bank-eligible securities and other fixed-income securities by financial subsidiaries; sells loans and derivatives; financial planning; and offers investment and financial advisory services. In addition, it offers mortgage banking; loan syndications; brokerage services; commercial and business banking for business enterprises, consumer banking, and private client and wealth management services; capital markets, professional commercial real estate, mortgage warehouse and asset-based lending, franchise and equipment finance, tax credit finance, energy and healthcare finance, asset management, and corporate and correspondent banking services. Further, the company provides transaction processing services including check clearing services and remittance processing, credit cards, investment, and sale of mutual fund and retail insurances, as well as trust, fiduciary, and agency services. First Horizon Corporation was founded in 1864 and is headquartered in Memphis, Tennessee.

About SmartFinancial

SmartFinancial, Inc. operates as the bank holding company for SmartBank that provides various financial services to individuals and corporate customers in Tennessee, Alabama, and Florida. It operates through Commercial Real Estate, Consumer Real Estate, Construction and Land Development, Commercial and Industrial, Leases, and Consumer and Other segments. The company offers noninterest-bearing and interest-bearing checking, interest-bearing demand, savings, money market, time deposit, individual retirement accounts, as well as certificates of deposit. It also provides commercial and residential real estate, consumer real estate, and construction and land development loans; commercial and financial loans and leases; commercial business and mortgage loans; and direct consumer installment, educational, agriculture, and other revolving credit loans; equipment financing, heavy equipment, semis, and trailers loans and leases to small and mid-size companies; letters of credit; and overdraft facilities. In addition, the company offers wealth management, insurance, mortgage origination, and internet and mobile banking services. SmartFinancial, Inc. is headquartered in Knoxville, Tennessee.