HTH Gains 16.9% in a Year: Should You Buy the Stock Now?

Shares of Hilltop Holdings Inc. HTH have gained 16.9% in the past year, outperforming the industry’s 10.8% growth. The S&P 500 Index has rallied 21.9% in the same period.

If we compare the company’s price performance with its peers, Commerce Bancshares, Inc. CBSH and Hancock Whitney, Corp. HWC, it appears that while the HTH stock has underperformed Hancock Whitney, it has outperformed Commerce Bancshares in the past year.

The HWC stock has gained 22.5%, while the CBSH stock has declined 17.2% in a year.

1-Year Price Performance

Let us see if the Hilltop Holdings stock has more upside left despite recent strength in price. In order to understand this, we must dig deep into its fundamentals and growth prospects.

Factors Aiding Hilltop Holdings’ Growth

Net Interest Income (NII) Growth: Hilltop Holdings remains focused on improving its NII. Though the company’s NII declined in 2024, 2021 and 2020, the metric increased in 2022, 2023 and 2025. The rise has partly been driven by acquisitions completed during that period, decent loan demand and relatively higher interest rates.

Also, the company’s net interest margin (NIM) increased to 2.98% in 2025 from 2.81% in 2024. While the metric declined in 2024, it increased in 2023 and 2022.

Despite the Federal Reserve’s interest rate cuts in 2025, NII and NIM growth are expected to continue in the near term, supported by decent loan demand and stabilizing funding costs.

Management expects NII to be relatively stable in 2026 compared with 2025 on the assumption of three Fed Funds rate cuts. We project NII to witness a CAGR of 5.3% by 2028. This will be driven by robust loan growth (net loans held for investment are projected to see a CAGR of 4.8% by 2028).

Declining Expenses: Hilltop Holdings has been managing expenses prudently. The company’s non-interest expenses recorded a negative six-year (2019-2025) CAGR of 2.3%. This was attributable to the company’s measures to reduce expenses in less profitable businesses, such as Prime Lending.

Expense Trend

Solid Balance Sheet Position: Hilltop Holdings has a sound balance sheet. As of Dec. 31, 2025, the company had debt (comprising short-term borrowings and notes payable) of $825.5 million, and cash and due from banks worth $1.23 billion. It also maintains investment-grade ratings of BBB+/Baa2 and a stable outlook from Fitch Ratings and Moody’s Investors Service, respectively. This renders the company favorable access to the debt market.

Supported by a strong liquidity position and earnings strength, the company is expected to continue with efficient capital distribution activities, thereby enhancing shareholder value.

Hilltop Holdings announced a dividend for the first time in 2016. Since then, the company has been increasing dividends regularly, with the latest one announced in January 2026. Also, the company has a share repurchase plan in place. In January 2026, its board of directors authorized a stock repurchase program worth up to $125 million through January 2027.

What’s Hurting Hilltop Holdings’ Growth?

Poor Asset Quality: While HTH recorded a significant fall in provisions in 2024, the metric increased massively in 2022, 2023 and 2025. Net charge-offs (NCOs) witnessed a CAGR of 20.4% over the last six years ended 2025.

Due to the current challenging macroeconomic outlook and anticipated increase in delinquencies, the company’s provision for credit losses and NCOs are likely to remain elevated in the near term, thereby hurting profitability.

We project provisions to increase significantly in 2026. While NCOs are anticipated to decline in 2026, the metric is expected to rise 11.6% in 2027 and 28.7% in 2028.

Weak Mortgage Origination Segment Performance: The weak performance of Hilltop Holdings’ Mortgage Origination segment is a headwind. Though mortgage loan origination volumes rose 3.3% in 2025 and 4.5% in 2024, they decreased 34.9% in 2023 and 44.2% in 2022.

To counter reduced loan volumes and pressure on profitability, PrimeLending has taken several measures, including reducing headcount, consolidating unprofitable branches and adjusting target fixed costs.

However, relatively higher mortgage rates, lack of inventory and stressed affordability for potential home buyers are expected to hurt origination volumes in the quarters ahead. This will, in turn, strain the segment’s performance.

Analyzing HTH’s Earnings Estimates & Valuation

The Zacks Consensus Estimate for Hilltop Holdings’ 2026 earnings is pegged at $2.18 per share, which indicates a year-over-year decline of 17.4%. The estimate for 2027 earnings is $2.32, suggesting a rise of 6.3%.

Over the past 30 days, the 2026 earnings estimate has been revised higher, while the 2027 estimate has been revised lower.

Estimate Revision Trend

Hilltop Holdings has a 12-month forward price-to-earnings (P/E) ratio of 16.66X, above the industry’s 10.18X. This indicates that its shares are trading at a premium than the broader industry.

P/E (F12M) Ratio

Commerce Bancshares has a P/E (F12M) ratio of 12.58X, while Hancock Whitney’s forward price/earnings ratio is 10.43X. This implies that the HTH stock is relatively more expensive than its close peers.

How to Approach the HTH Stock Now

Prudent expense management and a solid balance sheet position are likely to continue to support Hilltop Holdings’ growth. Despite lower rates, stabilizing funding costs and decent loan demand will keep aiding NII and NIM growth.

However, weak asset quality and subdued mortgage origination volumes remain major headwinds for the company. Also, analysts do not seem extremely optimistic regarding HTH’s earnings growth prospects. A stretched valuation further makes us apprehensive.

Thus, Hilltop Holdings remains a cautious bet for investors at the moment. However, those who already own the stock should hold onto it for now as the company is less likely to disappoint in the long run.

Currently, Hilltop Holdings carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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