Hilltop Holdings Inc. (NYSE:HTH) Financial Analysis: A Comparative Study

Hilltop Holdings Inc. (NYSE:HTH) is a financial holding company that provides a range of banking and financial services. It operates through its subsidiaries, offering services such as banking, mortgage origination, and financial advisory. In the competitive financial sector, Hilltop faces competition from other banks and financial institutions like Independent Bank Group, National Bank Holdings, and FB Financial Corporation.

In evaluating Hilltop Holdings, the focus is on its Return on Invested Capital (ROIC) and Weighted Average Cost of Capital (WACC). Hilltop's ROIC is -4.19%, while its WACC is 15.50%. This negative ROIC indicates that Hilltop is not generating sufficient returns to cover its cost of capital, suggesting inefficiencies in how it allocates its resources.

Comparatively, Independent Bank Group (IBTX) has a ROIC of 5.23% and a WACC of 19.00%, resulting in a ROIC to WACC ratio of 0.28. Although IBTX's returns are below its cost of capital, it still performs better than Hilltop. This suggests that IBTX is more efficient in utilizing its capital compared to Hilltop.

National Bank Holdings Corporation (NBHC) stands out with a ROIC of 16.84% and a WACC of 17.46%, leading to a ROIC to WACC ratio of 0.96. This indicates that NBHC is nearly covering its cost of capital, making it the most efficient among its peers. This efficiency highlights NBHC's effective capital management compared to Hilltop.

Other peers like FB Financial Corporation (FBK) and Home Bancshares, Inc. (HOMB) also show varying degrees of capital efficiency. FBK has a ROIC of 0.60% against a WACC of 19.97%, while HOMB has a ROIC of 1.88% and a WACC of 12.23%. Both companies, like Hilltop, struggle to generate returns above their cost of capital, but still perform better than Hilltop in terms of ROIC.