Cathay General Bancorp (NASDAQ:CATY) & CVB Financial (NASDAQ:CVBF) Critical Contrast

Cathay General Bancorp (NASDAQ:CATY) and CVB Financial (NASDAQ:CVBF) are both mid-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, analyst recommendations, profitability, dividends, earnings and risk.

Volatility & Risk

Cathay General Bancorp has a beta of 0.86, indicating that its stock price is 14% less volatile than the S&P 500. Comparatively, CVB Financial has a beta of 0.65, indicating that its stock price is 35% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Cathay General Bancorp	23.79%	11.37%	1.38%
CVB Financial	32.05%	9.16%	1.34%

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Cathay General Bancorp and CVB Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cathay General Bancorp	1	3	1	1	2.33
CVB Financial	0	2	4	0	2.67

Cathay General Bancorp currently has a consensus target price of $51.75, indicating a potential downside of 14.40%. CVB Financial has a consensus target price of $24.30, indicating a potential upside of 9.77%. Given CVB Financial’s stronger consensus rating and higher probable upside, analysts clearly believe CVB Financial is more favorable than Cathay General Bancorp.

Earnings & Valuation

This table compares Cathay General Bancorp and CVB Financial”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cathay General Bancorp	$1.38 billion	2.93	$315.12 million	$4.85	12.46
CVB Financial	$648.47 million	6.02	$209.30 million	$1.52	14.56

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

Insider and Institutional Ownership

75.0% of Cathay General Bancorp shares are held by institutional investors. Comparatively, 74.2% of CVB Financial shares are held by institutional investors. 4.5% of Cathay General Bancorp shares are held by company insiders. Comparatively, 6.4% of CVB Financial shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Dividends

Cathay General Bancorp pays an annual dividend of $1.52 per share and has a dividend yield of 2.5%. CVB Financial pays an annual dividend of $0.80 per share and has a dividend yield of 3.6%. Cathay General Bancorp pays out 31.3% of its earnings in the form of a dividend. CVB Financial pays out 52.6% 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.

Summary

Cathay General Bancorp beats CVB Financial on 9 of the 17 factors compared between the two stocks.

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 CVB Financial

CVB Financial Corp. operates as a bank holding company for Citizens Business Bank, a state-chartered bank that provides banking and financial services to small to mid-sized businesses and individuals. It offers checking, savings, money market, and time certificates of deposit products for business and personal accounts; and serves as a federal tax depository for business customers. The company also provides commercial lending products comprising lines of credit and other working capital financing, accounts receivable lending, and letters of credit; agriculture loans to finance the operating needs of wholesale dairy farm operations, cattle feeders, livestock raisers, and farmers; lease financing services for municipal governments; commercial real estate and construction loans; and consumer financing products, including automobile leasing and financing, lines of credit, credit cards, home mortgages, and home equity loans and lines of credit. In addition, it offers various specialized services, such as treasury management systems for monitoring cash flow, merchant card processing program, armored pick-up and delivery, payroll services, remote deposit capture, electronic funds transfers, wires and automated clearinghouse, and online account access. Further, the company provides trust services, such as fiduciary services, mutual funds, annuities, 401(k) plans, and individual investment accounts. CVB Financial Corp. was founded in 1974 and is headquartered in Ontario, California.