Critical Analysis: C&F Financial (NASDAQ:CFFI) & Hilltop (NYSE:HTH)

C&F Financial (NASDAQ:CFFI) and Hilltop (NYSE:HTH) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their dividends, profitability, valuation, institutional ownership, risk, earnings and analyst recommendations.

Dividends

C&F Financial pays an annual dividend of $1.92 per share and has a dividend yield of 1.7%. Hilltop pays an annual dividend of $0.88 per share and has a dividend yield of 2.4%. C&F Financial pays out 20.6% of its earnings in the form of a dividend. Hilltop pays out 36.7% 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. C&F Financial has raised its dividend for 1 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.

Institutional and Insider Ownership

37.2% of C&F Financial shares are held by institutional investors. Comparatively, 57.1% of Hilltop shares are held by institutional investors. 6.4% of C&F Financial shares are held by insiders. Comparatively, 5.4% of Hilltop shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares C&F Financial and Hilltop’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
C&F Financial	15.37%	11.01%	1.06%
Hilltop	9.08%	6.51%	0.88%

Earnings and Valuation

This table compares C&F Financial and Hilltop”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
C&F Financial	$186.13 million	1.94	$26.83 million	$9.33	11.89
Hilltop	$1.63 billion	1.30	$165.59 million	$2.40	15.54

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

Analyst Recommendations

This is a breakdown of current recommendations for C&F Financial and Hilltop, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
C&F Financial	0	1	2	0	2.67
Hilltop	1	3	1	0	2.00

C&F Financial currently has a consensus target price of $115.00, suggesting a potential upside of 3.62%. Hilltop has a consensus target price of $42.00, suggesting a potential upside of 12.64%. Given Hilltop’s higher probable upside, analysts clearly believe Hilltop is more favorable than C&F Financial.

Risk & Volatility

C&F Financial has a beta of 0.34, suggesting that its share price is 66% less volatile than the S&P 500. Comparatively, Hilltop has a beta of 0.88, suggesting that its share price is 12% less volatile than the S&P 500.

Summary

C&F Financial beats Hilltop on 9 of the 17 factors compared between the two stocks.

About C&F Financial

C&F Financial Corp. is a bank holding company, which engages in the provision of banking services to individuals and businesses. It operates through the following segments: Community Banking, Mortgage Banking and Consumer Finance. The Community Banking segment provides checking and savings deposit accounts, business, real estate, development, mortgage, home equity, and installment loans. The Mortgage Banking segment offers ancillary mortgage loan origination services for loan settlement and residential appraisals. The Consumer Finance segment consists of automobile financing through lending programs that are designed to serve customers in the non-prime market who have limited access to traditional automobile financing. The company was founded on March 8, 1994 and is headquartered in Toano, VA.

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.