Critical Contrast: HomeTown Bankshares (HMTA) & HomeStreet (HMST)

HomeTown Bankshares (NASDAQ:HMTA) and HomeStreet (NASDAQ:HMST) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their analyst recommendations, earnings, institutional ownership, risk, dividends, valuation and profitability.

Volatility and Risk

HomeTown Bankshares has a beta of 0.71, indicating that its stock price is 29% less volatile than the S&P 500. Comparatively, HomeStreet has a beta of 0.72, indicating that its stock price is 28% less volatile than the S&P 500.

Dividends

HomeTown Bankshares pays an annual dividend of $0.16 per share and has a dividend yield of 1.1%. HomeStreet does not pay a dividend.

Analyst Ratings

This is a summary of recent ratings and target prices for HomeTown Bankshares and HomeStreet, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
HomeTown Bankshares 0 0 0 0 N/A
HomeStreet 0 1 4 0 2.80

HomeStreet has a consensus price target of $31.40, indicating a potential upside of 11.03%. Given HomeStreet’s higher probable upside, analysts clearly believe HomeStreet is more favorable than HomeTown Bankshares.

Valuation and Earnings

This table compares HomeTown Bankshares and HomeStreet’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
HomeTown Bankshares $26.19 million 3.18 $3.95 million N/A N/A
HomeStreet $507.66 million 1.51 $40.03 million $1.48 19.11

HomeStreet has higher revenue and earnings than HomeTown Bankshares.

Profitability

This table compares HomeTown Bankshares and HomeStreet’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
HomeTown Bankshares 15.10% 8.74% 0.82%
HomeStreet 7.88% 5.61% 0.57%

Institutional and Insider Ownership

34.5% of HomeTown Bankshares shares are held by institutional investors. Comparatively, 80.9% of HomeStreet shares are held by institutional investors. 5.3% of HomeTown Bankshares shares are held by company insiders. Comparatively, 1.6% of HomeStreet shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

HomeStreet beats HomeTown Bankshares on 7 of the 13 factors compared between the two stocks.

HomeTown Bankshares Company Profile

HomeTown Bankshares Corporation operates as the bank holding company for HomeTown Bank that provides retail and commercial banking products and services in the United States. It offers various deposit products, such as checking accounts, savings and time deposits, daily money market accounts, longer-term certificates of deposit, and individual retirement accounts. The company's loan portfolio includes commercial loans comprising secured and unsecured loans for working capital consisting of inventory and receivables; business expansion loans, such as real estate acquisition and improvement loans; and loans for the purchase of equipment and machinery. It also offers consumer loans and lines of credit comprising secured and unsecured loans for financing automobiles, home improvements, education, and personal investments; fixed and floating-rate mortgage loans; and real estate construction and acquisition loans, as well as consumer residential mortgage loans. In addition, the company offers investment products and financial advisory services; insurance products and services; private banking services; and safe deposit boxes, traveler's checks, direct deposit of payroll and social security checks, automatic drafts for various accounts, overdraft protection, check cards, credit cards, and merchant card services, as well as Internet banking services, such as online bill pay and mobile banking services. Its market area primarily consists of the City of Roanoke, Roanoke County, and the City of Salem, Virginia; and contiguous counties, including Botetourt, Bedford, Franklin, and Montgomery, Virginia. As of March 30, 2018, the company provided its products and services through six locations in Virginia. HomeTown Bankshares Corporation was founded in 2004 and is headquartered in Roanoke, Virginia.

HomeStreet Company Profile

HomeStreet, Inc. operates as the bank holding company for HomeStreet Bank, a state-chartered commercial bank that provides commercial and consumer banking services primarily in the Pacific Northwest, California, and Hawaii. The company operates in two segments, Commercial and Consumer Banking, and Mortgage Banking. The Commercial and Consumer Banking segment offers deposit products; non-deposit investment products; and insurance products and cash management services. It also offers consumer loans, single family residential mortgages, loans secured by commercial real estate, construction loans for residential and commercial real estate projects, commercial business loans, and agricultural loans; and bridge loans and permanent loans primarily on single family residences, as well as on office, retail, industrial, and multifamily property types. This segment provides its products and services through bank branches, lending centers, and ATMs, as well as through online, mobile, and telephone banking. The Mortgage Banking segment originates single family residential mortgage loans for sale in the secondary market. This segment is also involved in the sale of loans on a servicing-released and servicing-retained basis to securitizers and correspondent lenders. As of December 31, 2018, it had a network of 60 retail deposit branches located in Washington state, Southern California, the Portland, Oregon, and Hawaii; and 32 primary stand-alone home loan centers and 6 primary commercial lending centers. The company was formerly known as Continental Mortgage and Loan Company. HomeStreet, Inc. was founded in 1921 and is headquartered in Seattle, Washington.

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