Critical Analysis: Hilltop (NYSE:HTH) and United Bancorp (NASDAQ:UBCP)

Hilltop (NYSE:HTH) and United Bancorp (NASDAQ:UBCP) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, institutional ownership, analyst recommendations and earnings.

Dividends

Hilltop pays an annual dividend of $0.68 per share and has a dividend yield of 2.2%. United Bancorp pays an annual dividend of $0.71 per share and has a dividend yield of 5.4%. Hilltop pays out 39.8% of its earnings in the form of a dividend. United Bancorp pays out 44.7% 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. United Bancorp has raised its dividend for 12 consecutive years. United Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Hilltop has a beta of 1.13, indicating that its share price is 13% more volatile than the S&P 500. Comparatively, United Bancorp has a beta of 0.41, indicating that its share price is 59% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings for Hilltop and United Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hilltop	0	3	0	0	2.00
United Bancorp	0	0	0	0	N/A

Hilltop currently has a consensus target price of $34.50, suggesting a potential upside of 9.63%. Given Hilltop’s higher probable upside, equities research analysts clearly believe Hilltop is more favorable than United Bancorp.

Institutional and Insider Ownership

57.1% of Hilltop shares are held by institutional investors. Comparatively, 15.4% of United Bancorp shares are held by institutional investors. 28.9% of Hilltop shares are held by insiders. Comparatively, 11.7% of United Bancorp shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Hilltop and United Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hilltop	7.10%	5.30%	0.70%
United Bancorp	19.85%	14.19%	1.04%

Earnings & Valuation

This table compares Hilltop and United Bancorp”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hilltop	$1.12 billion	1.83	$109.65 million	$1.71	18.40
United Bancorp	$40.90 million	1.90	$8.95 million	$1.59	8.21

Hilltop has higher revenue and earnings than United Bancorp. United Bancorp 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 United Bancorp on 9 of the 15 factors compared between the two stocks.

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.

About United Bancorp

United Bancorp, Inc. operates as the bank holding company for Unified Bank that provides commercial and retail banking services in Ohio. The company provides range of banking and financial services, which includes accepting demand, savings, and time deposits. It also offers commercial, real estate and consumer loans. United Bancorp, Inc. was founded in 1902 and is headquartered in Martins Ferry, Ohio.