Critical Survey: Cathay General Bancorp (NASDAQ:CATY) vs. CPB (NYSE:CPF)

Cathay General Bancorp (NASDAQ:CATY) and CPB (NYSE:CPF) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, valuation, analyst recommendations, dividends, risk, institutional ownership and earnings.

Earnings & Valuation

This table compares Cathay General Bancorp and CPB”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cathay General Bancorp	$1.38 billion	2.40	$315.12 million	$4.54	10.93
CPB	$365.98 million	2.30	$77.48 million	$2.86	11.15

Cathay General Bancorp has higher revenue and earnings than CPB. Cathay General Bancorp is trading at a lower price-to-earnings ratio than CPB, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

75.0% of Cathay General Bancorp shares are owned by institutional investors. Comparatively, 88.4% of CPB shares are owned by institutional investors. 4.9% of Cathay General Bancorp shares are owned by company insiders. Comparatively, 1.7% of CPB shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Cathay General Bancorp and CPB’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cathay General Bancorp	22.76%	10.89%	1.32%
CPB	21.17%	13.64%	1.06%

Dividends

Cathay General Bancorp pays an annual dividend of $1.52 per share and has a dividend yield of 3.1%. CPB pays an annual dividend of $1.16 per share and has a dividend yield of 3.6%. Cathay General Bancorp pays out 33.5% of its earnings in the form of a dividend. CPB pays out 40.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. CPB has increased its dividend for 1 consecutive years. CPB is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Cathay General Bancorp has a beta of 0.86, meaning that its stock price is 14% less volatile than the S&P 500. Comparatively, CPB has a beta of 0.95, meaning that its stock price is 5% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Cathay General Bancorp and CPB, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cathay General Bancorp	0	3	2	0	2.40
CPB	0	1	2	0	2.67

Cathay General Bancorp currently has a consensus target price of $52.50, indicating a potential upside of 5.85%. CPB has a consensus target price of $35.50, indicating a potential upside of 11.36%. Given CPB’s stronger consensus rating and higher possible upside, analysts plainly believe CPB is more favorable than Cathay General Bancorp.

About Cathay General Bancorp

Cathay General Bancorp operates as the holding company for Cathay Bank that offers various commercial banking products and services to individuals, professionals, and small to medium-sized businesses in the United States. The company offers various deposit products, including passbook accounts, checking accounts, money market deposit accounts, certificates of deposit, individual retirement accounts, and public funds deposits. It also provides loan products, such as commercial mortgage loans, commercial loans, small business administration loans, residential mortgage loans, real estate construction loans, and home equity lines of credit, as well as installment loans to individuals for household, and other consumer expenditures. In addition, the company offers trade financing, letter of credit, wire transfer, forward currency spot and forward contract, safe deposit, collection, automatic teller machine, Internet banking, investment, and other customary bank services, as well as securities and insurance products. Cathay General Bancorp was founded in 1962 and is headquartered in Los Angeles, California.

About CPB

Central Pacific Financial Corp. operates as the bank holding company for Central Pacific Bank that provides a range of commercial banking products and services to businesses, professionals, and individuals in the United States. It offers various deposit products and services, including checking, savings and time deposits, cash management and digital banking, trust, and retail brokerage services, as well as money market accounts and certificates of deposit. The company also provides various lending activities, such as commercial, commercial and residential mortgage, home equity, and consumer loans; and other products and services comprising debit cards, internet and mobile banking, cash management services, full-service ATMs, safe deposit boxes, international banking services, night depository facilities, foreign exchange, and wire transfers. In addition, it offers wealth management products and services that include non-deposit investment products, annuities, insurance, investment management, asset custody and general consultation, and planning services. The company was founded in 1954 and is headquartered in Honolulu, Hawaii.