Home Bancshares (HOMB)

Regional banking company Home Bancshares (NYSE:HOMB) beat Wall Street’s revenue expectations in Q4 CY2025, with sales up 7.6% year on year to $282.1 million. Its non-GAAP profit of $0.60 per share was in line with analysts’ consensus estimates.

Company Overview

Founded in Conway, Arkansas in 1998 and growing through strategic acquisitions across the Southeast, Home Bancshares (NYSE:HOMB) operates as the bank holding company for Centennial Bank, providing commercial and retail banking services to businesses and individuals across multiple states.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

Home Bancshares competes with other regional banks operating in the Southeast, including Regions Financial (NYSE:RF), Synovus Financial (NYSE:SNV), Simmons First National (NASDAQ:SFNC), and Bank OZK (NASDAQ:OZK), as well as national banks with significant presence in its markets like JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC), and Wells Fargo (NYSE:WFC).

From lending activities to service fees, most banks build their revenue model around two income sources. Interest rate spreads between loans and deposits create the first stream, with the second coming from charges on everything from basic bank accounts to complex investment banking transactions. Unfortunately, Home Bancshares’s 9.2% annualized revenue growth over the last five years was mediocre. This fell short of our benchmark for the banking sector and is a poor baseline for our analysis.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Home Bancshares’s recent performance shows its demand has slowed as its annualized revenue growth of 4.4% over the last two years was below its five-year trend. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Home Bancshares reported year-on-year revenue growth of 7.6%, and its $282.1 million of revenue exceeded Wall Street’s estimates by 2.9%.

Net interest income made up 82.7% of the company’s total revenue during the last five years, meaning Home Bancshares barely relies on non-interest income to drive its overall growth.

Markets consistently prioritize net interest income growth over fee-based revenue, recognizing its superior quality and recurring nature compared to the more unpredictable non-interest income streams.

Topline growth alone doesn't tell the complete story - the profitability of that growth shapes actual earnings impact. Banks track this dynamic through efficiency ratios, which compare non-interest expenses such as personnel, rent, IT, and marketing costs to total revenue streams.

Markets emphasize efficiency ratio trends over static measurements, recognizing that revenue compositions drive different expense bases. Lower efficiency ratios signal superior performance by indicating that banks are controlling costs effectively relative to their income.

Over the last five years, Home Bancshares’s efficiency ratio has increased by 1.1 percentage points, going from 41.7% to 41.3%. Said differently, the company’s expenses have increased at a faster rate than revenue, which usually raises questions unless the company is in high-growth mode and reinvesting its profits into attractive ventures.

Home Bancshares’s efficiency ratio came in at 39.5% this quarter, beating analysts’ expectations by 187.3 basis points (100 basis points = 1 percentage point).

For the next 12 months, Wall Street expects Home Bancshares to maintain its trailing one-year ratio with a projection of 42%.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Home Bancshares’s EPS grew at a weak 6.2% compounded annual growth rate over the last five years, lower than its 9.2% annualized revenue growth. However, its efficiency ratio actually improved during this time, telling us that non-fundamental factors such as taxes affected its ultimate earnings.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Home Bancshares, its two-year annual EPS growth of 8.9% was higher than its five-year trend. Accelerating earnings growth is almost always an encouraging data point.

In Q4, Home Bancshares reported adjusted EPS of $0.60, up from $0.50 in the same quarter last year. This print was close to analysts’ estimates. Over the next 12 months, Wall Street expects Home Bancshares’s full-year EPS of $2.35 to grow 4.9%.

The balance sheet drives banking profitability since earnings flow from the spread between borrowing and lending rates. As such, valuations for these companies concentrate on capital strength and sustainable equity accumulation potential.

This is why we consider tangible book value per share (TBVPS) the most important metric to track for banks. TBVPS represents the real, liquid net worth per share of a bank, excluding intangible assets that have debatable value upon liquidation. Traditional metrics like EPS are helpful but face distortion from M&A activity and loan loss accounting rules.

Home Bancshares’s TBVPS grew at an excellent 8.5% annual clip over the last five years. TBVPS growth has also accelerated recently, growing by 12% annually over the last two years from $11.63 to $14.60 per share.

Over the next 12 months, Consensus estimates call for Home Bancshares’s TBVPS to grow by 10.4% to $16.12, mediocre growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, Home Bancshares has averaged a Tier 1 capital ratio of 15.2%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity, or ROE, tells us how much profit a company generates for each dollar of shareholder equity, a key funding source for banks. Over a long period, banks with high ROE tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.

Over the last five years, Home Bancshares has averaged an ROE of 10.8%, respectable for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired.

We enjoyed seeing Home Bancshares beat analysts’ revenue expectations this quarter. We were also happy its net interest income outperformed Wall Street’s estimates. On the other hand, its EPS was in line. Overall, this print had some key positives. The stock remained flat at $28.37 immediately following the results.

Updated: January 14, 2026 at 11:28 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Home Bancshares.

Home Bancshares isn’t a terrible business, but it isn’t one of our picks. For starters, its revenue growth was mediocre over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while its admirable net interest margin a wonderful starting point for the overall profitability of the business, the downside is its weak EPS growth over the last five years shows it’s failed to produce meaningful profits for shareholders. On top of that, its projected EPS for the next year is lacking.

Home Bancshares’s P/B ratio based on the next 12 months is 1.2x. While this valuation is fair, the upside isn’t great compared to the potential downside. We're fairly confident there are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $33.13 on the company (compared to the current share price of $27.40).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.