Head-To-Head Survey: Home BancShares (NYSE:HOMB) vs. Security Federal (OTCMKTS:SFDL)

Home BancShares (NYSE:HOMB) and Security Federal (OTCMKTS:SFDL) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, dividends, valuation, risk, profitability, institutional ownership and earnings.

Volatility & Risk

Home BancShares has a beta of 0.68, indicating that its stock price is 32% less volatile than the S&P 500. Comparatively, Security Federal has a beta of 0.43, indicating that its stock price is 57% less volatile than the S&P 500.

Profitability

This table compares Home BancShares and Security Federal’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Home BancShares	32.48%	11.11%	2.05%
Security Federal	15.72%	12.60%	0.88%

Institutional & Insider Ownership

67.3% of Home BancShares shares are owned by institutional investors. 6.4% of Home BancShares shares are owned by company insiders. Comparatively, 36.4% of Security Federal shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings for Home BancShares and Security Federal, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Home BancShares	0	4	2	0	2.33
Security Federal	0	0	0	0	0.00

Home BancShares presently has a consensus price target of $31.20, suggesting a potential upside of 14.98%. Given Home BancShares’ stronger consensus rating and higher possible upside, research analysts clearly believe Home BancShares is more favorable than Security Federal.

Earnings & Valuation

This table compares Home BancShares and Security Federal”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Home BancShares	$1.48 billion	3.70	$475.44 million	$2.43	11.17
Security Federal	$90.14 million	1.25	$13.67 million	$4.00	9.13

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

Dividends

Home BancShares pays an annual dividend of $0.84 per share and has a dividend yield of 3.1%. Security Federal pays an annual dividend of $0.64 per share and has a dividend yield of 1.8%. Home BancShares pays out 34.6% of its earnings in the form of a dividend. Security Federal pays out 16.0% 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. Home BancShares has raised its dividend for 15 consecutive years. Home BancShares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Home BancShares beats Security Federal on 13 of the 17 factors compared between the two stocks.

About Home BancShares

Home Bancshares, Inc. (Conway, AR) operates as the bank holding company for Centennial Bank that provides commercial and retail banking, and related financial services to businesses, real estate developers and investors, individuals, and municipalities. Its deposit products include checking, savings, and money market accounts, as well as certificates of deposit. The company's loan portfolio comprises non-farm/non-residential real estate, construction/land development, residential mortgage, consumer, agricultural, and commercial and industrial loans. It provides internet banking, mobile banking and voice response information, cash management, overdraft protection, direct deposit, and automatic account transfer services, as well as safe deposit boxes and the United States savings bonds. In addition, the company writes policies for commercial and personal lines of business, including insurance for property, casualty, life, health, and employee benefits. It operates through branches in Arkansas, Florida, Alabama, Texas, and New York City. Home Bancshares, Inc. (Conway, AR) was founded in 1998 and is headquartered in Conway, Arkansas.

About Security Federal

Security Federal Corporation operates as the bank holding company for Security Federal Bank that provides various banking products and services. It offers various deposit products, such as savings and checking accounts, money market accounts, fixed interest rate certificates with varying maturities, and individual retirement accounts. The company provides real estate loans comprising commercial real estate loans secured by non-residential commercial properties, churches, hotels, residential developments, and multi-family dwellings; one-to-four family residential real estate loans; and construction loans and loans for the acquisition, development, and construction of residential subdivisions and commercial projects. In addition, it offers commercial and agricultural business loans secured by business equipment, furniture and fixtures, inventory, and receivables, or unsecured; and consumer loans including home improvements, residential lots, mortgage, automobiles, boats, mobile homes, recreational vehicles, and education. The company offers trust, financial planning, and financial management services; and insurance agency services, such as auto, business, and home insurance. Additionally, it invests in various types of liquid assets, including U.S. Treasury obligations and securities of various federal agencies, certificates of deposit at insured institutions, mutual funds, bankers' acceptances, and federal funds, as well as commercial paper and corporate debt securities. It through branch offices in Aiken, Lexington, Richland and Saluda counties in South Carolina and Columbia; and Richmond counties in Georgia. Security Federal Corporation was founded in 1922 and is headquartered in Aiken, South Carolina.