Contrasting Home BancShares (NYSE:HOMB) and Colony Bankcorp (NYSE:CBAN)

Colony Bankcorp (NYSE:CBAN) and Home BancShares (NYSE:HOMB) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their dividends, valuation, risk, earnings, profitability, institutional ownership and analyst recommendations.

Risk and Volatility

Colony Bankcorp has a beta of 0.56, meaning that its share price is 44% less volatile than the S&P 500. Comparatively, Home BancShares has a beta of 0.72, meaning that its share price is 28% less volatile than the S&P 500.

Dividends

Colony Bankcorp pays an annual dividend of $0.48 per share and has a dividend yield of 2.4%. Home BancShares pays an annual dividend of $0.92 per share and has a dividend yield of 3.2%. Colony Bankcorp pays out 29.1% of its earnings in the form of a dividend. Home BancShares pays out 38.0% 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. Colony Bankcorp has increased its dividend for 7 consecutive years and Home BancShares has increased 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.

Profitability

This table compares Colony Bankcorp and Home BancShares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Colony Bankcorp	15.42%	10.40%	1.06%
Home BancShares	32.10%	11.12%	2.07%

Institutional and Insider Ownership

50.4% of Colony Bankcorp shares are owned by institutional investors. Comparatively, 67.3% of Home BancShares shares are owned by institutional investors. 3.9% of Colony Bankcorp shares are owned by company insiders. Comparatively, 6.4% of Home BancShares shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Colony Bankcorp and Home BancShares”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Colony Bankcorp	$151.62 million	2.85	$28.25 million	$1.65	12.32
Home BancShares	$1.48 billion	3.86	$475.44 million	$2.42	11.77

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

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Colony Bankcorp	0	1	3	0	2.75
Home BancShares	0	4	5	0	2.56

Colony Bankcorp presently has a consensus target price of $23.00, suggesting a potential upside of 13.13%. Home BancShares has a consensus target price of $33.00, suggesting a potential upside of 15.90%. Given Home BancShares’ higher possible upside, analysts plainly believe Home BancShares is more favorable than Colony Bankcorp.

Summary

Home BancShares beats Colony Bankcorp on 14 of the 17 factors compared between the two stocks.

About Colony Bankcorp

Colony Bankcorp, Inc. operates as the bank holding company for Colony Bank that provides various banking products and services to commercial and consumer customers. The company offers various deposit products, including demand, savings, and time deposits. It also provides loans to small and medium-sized businesses; residential and commercial construction, and land development loans; commercial real estate loans; commercial loans; agri-business and production loans; residential mortgage loans; home equity loans; and consumer loans. In addition, the company offers internet banking services, electronic bill payment services, safe deposit box rentals, telephone banking, credit and debit card services, and remote depository products, as well as access to a network of ATMs. As of January 20, 2022, it operated 39 locations throughout Georgia. The company was founded in 1975 and is headquartered in Fitzgerald, Georgia.

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.