HTH Gains 13.5% So Far This Year: Should You Buy the Stock Now?

Shares of Hilltop Holdings Inc. HTH have gained 13.5% so far this year, outperforming the industry’s 9.5% growth and the S&P 500 Index’s 10.9% rally.

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 same period.

Year to date, the HWC stock has gained 17.5%, while the CBSH stock has risen 10.7%.

YTD Price Performance

Image Source: Zacks Investment Research

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.

Key Strengths of Hilltop Holdings

Improving Net Interest Income (NII): Hilltop Holdings remains focused on strengthening its NII through disciplined balance-sheet mix and funding management. After declining in 2024, NII rebounded in 2025 and maintained its growth momentum in the first half of 2026, supported by healthy loan demand, a favorable rate environment and easing funding-cost pressures.

Encouragingly, the company’s net interest margin (NIM) improved to 2.98% in 2025 from 2.81% in 2024 and continued to expand during the first six months of 2026.

Given decent loan growth prospects and stabilizing funding costs, the positive NII and margin trajectory is likely to persist. We project NII to see a compound annual growth rate (CAGR) of 4.5% through 2028, while NIM is expected to expand to 3.20% in 2026.

Prudent Expense Management: Hilltop Holdings has maintained a disciplined approach to expense management, supporting operating efficiency amid an uncertain business environment. Although non-interest expenses increased in the first half of 2026, they recorded a negative CAGR of 2.3% over the six years ended 2025, reflecting continued cost-control initiatives, particularly across lower-return businesses such as PrimeLending.

Expense Trend

Image Source: Zacks Investment Research

For 2026, management expects non-variable expenses to increase only 0-2%, while variable costs are expected to move largely in line with fee revenues. We project non-interest expenses to rise marginally this year.

Solid Balance Sheet: Hilltop Holdings maintains a solid balance sheet and robust capital position, providing considerable financial flexibility. As of June 30, 2026, the company had cash and due from banks of $750.5 million, while debt, comprising short-term borrowings and notes payable, totaled $1.39 billion. Importantly, capital levels remained strong, with a common equity tier 1 capital ratio of 18.34% and a tier 1 leverage ratio of 12.73%, providing substantial cushions above regulatory requirements.

The company also maintains investment-grade credit ratings of BBB+/Baa2 with stable outlooks from Fitch Ratings and Moody’s Investors Service, respectively, supporting favorable access to wholesale funding. Further, the bank was not utilizing any of its Federal Home Loan Bank borrowing capacity at the end of June 2026, underscoring its funding flexibility.

Consistent Capital Returns: Hilltop Holdings has demonstrated a strong commitment to returning capital to shareholders, supported by its solid liquidity and capital position. The company initiated its dividend in 2016 and has increased it regularly since then, with the latest hike announced in July 2026.

In addition, the company continues to actively repurchase shares. In January 2026, HTH’s board authorized a share repurchase program of up to $125 million through January 2027, which was subsequently expanded to $200 million in July.

Given the company’s healthy earnings capacity, strong capitalization and ample financial flexibility, it appears well-positioned to sustain dividends and opportunistic share repurchases.

Hilltop Holdings’ Headwinds

Weak Asset Quality: Hilltop Holdings’ asset quality remains a major concern, particularly given its exposure to real estate-related lending and pockets of stress across select portfolios. Although provisions declined significantly in 2024, they increased substantially in 2022, 2023 and 2025, highlighting continued credit-cost volatility. Further, net charge-offs (NCOs) witnessed a CAGR of 20.4% over the six years ended 2025.

While both provisions and NCOs declined in the first six months of 2026, a challenging macroeconomic backdrop and continued exposure to real estate-related loans could keep credit costs elevated.

Mortgage Banking Weakness: Hilltop Holdings’ Mortgage Origination segment continues to face profitability challenges amid a difficult housing market. Although mortgage origination volumes increased in 2024, 2025 and the first half of 2026, the recent improvement has been supported largely by higher refinance activity, while the purchase mix has weakened.

PrimeLending has responded by reducing headcount, consolidating underperforming branches and lowering its fixed-cost base. However, the segment remains highly sensitive to mortgage rates, housing inventory and affordability trends.

Management’s 2026 origination volume outlook of $8.5-$9.5 billion remains market dependent, and subdued purchase activity could limit the benefits of ongoing cost actions. Thus, persistent pressure on mortgage volumes and margins is likely to constrain the segment’s profitability and remain a drag on Hilltop Holdings’ overall performance.

Analyzing HTH’s Earnings Estimates & Valuation

The Zacks Consensus Estimate for Hilltop Holdings’ 2026 earnings is pegged at $2.59 per share, which indicates a year-over-year decline of 1.9%. The estimate for 2027 earnings is $2.51, suggesting a decline of 3.1%. Over the past 30 days, the 2026 earnings estimate has been revised higher, while the 2027 estimate has been unchanged.

Earnings Estimate Revision

Image Source: Zacks Investment Research

Hilltop Holdings has a 12-month forward price-to-earnings (P/E) ratio of 15.19X, above the industry’s 10.82X. This indicates that its shares are trading at a premium than the broader industry.

P/E (F12M) Ratio

Image Source: Zacks Investment Research

Commerce Bancshares has a P/E (F12M) ratio of 12.95X, while Hancock Whitney’s forward price/earnings ratio is 10.73X. This implies that the HTH stock is relatively more expensive than its close peers.

How to Approach the HTH Stock Now

Weak asset quality and subdued mortgage origination volumes remain key headwinds for Hilltop Holdings’ growth. Moreover, analysts remain cautious about the company’s earnings growth prospects, while its stretched valuation warrants some caution.

Nevertheless, prudent expense management and a solid balance sheet should continue to support Hilltop Holdings’ financial performance. Stabilizing funding costs, improving net interest margins and decent loan demand are also likely to sustain NII growth.

Given these factors, HTH appears well-positioned despite near-term challenges. The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Research Chief Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research