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

Dividends

Cathay General Bancorp pays an annual dividend of $0.96 per share and has a dividend yield of 2.3%. First Foundation does not pay a dividend. Cathay General Bancorp pays out 39.0% of its earnings in the form of a dividend. Cathay General Bancorp has increased its dividend for 5 consecutive years.

Institutional & Insider Ownership

55.8% of First Foundation shares are held by institutional investors. Comparatively, 70.5% of Cathay General Bancorp shares are held by institutional investors. 14.3% of First Foundation shares are held by insiders. Comparatively, 4.9% of Cathay General Bancorp shares are held by 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.

Valuation & Earnings

This table compares First Foundation and Cathay General Bancorp’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
First Foundation $175.52 million 4.07 $27.58 million $0.97 16.58
Cathay General Bancorp $612.45 million 5.56 $176.04 million $2.46 17.04

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

Volatility and Risk

First Foundation has a beta of 0.59, suggesting that its stock price is 41% less volatile than the S&P 500. Comparatively, Cathay General Bancorp has a beta of 1.32, suggesting that its stock price is 32% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
First Foundation 12.87% 9.51% 0.82%
Cathay General Bancorp 31.65% 11.98% 1.51%

Analyst Ratings

This is a breakdown of current ratings and recommmendations for First Foundation and Cathay General Bancorp, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Foundation 0 2 2 0 2.50
Cathay General Bancorp 0 4 3 0 2.43

First Foundation presently has a consensus target price of $20.88, suggesting a potential upside of 29.82%. Cathay General Bancorp has a consensus target price of $47.36, suggesting a potential upside of 12.97%. Given First Foundation’s stronger consensus rating and higher probable upside, research analysts plainly believe First Foundation is more favorable than Cathay General Bancorp.

Summary

Cathay General Bancorp beats First Foundation on 13 of the 17 factors compared between the two stocks.

First Foundation Company Profile

First Foundation Inc., through its subsidiaries, provides financial services to individuals, businesses, and other organizations in the United States. It operates in two segments, Banking; and Investment Management and Wealth Planning. The company offers a range of bank deposit products, including personal and business checking accounts, savings accounts, interest-bearing negotiable order of withdrawal accounts, money market accounts, and time certificates of deposit; and loan products consisting of multifamily and single family residential real estate loans, commercial real estate loans, and commercial term loans and lines of credit, as well as consumer loans, such as personal installment loans and lines of credit, and home equity lines of credit. It also provides various specialized services comprising trust services, online banking, remote deposit capture, merchant credit card services, ATM cards, Visa debit cards, and business sweep accounts, as well as insurance brokerage services. In addition, the company offers investment management and financial planning services; advisory and coordination services in the areas of estate planning, retirement planning, charitable and business ownership issues, and issues faced by executives of publicly-traded companies; and financial, investment, and economic advisory and related services. Further, it provides support services, including the processing and transmission of financial and economic data for charitable organizations. The company was founded in 1985 and is headquartered in Irvine, California.

Cathay General Bancorp Company Profile

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 automobile, household, and other consumer expenditures. In addition, the company offers letter of credit, wire transfer, forward currency spot and forward contract, traveler's check, safe deposit, night deposit, social security payment deposit, collection, bank-by-mail, drive-up and walk-up window, automatic teller machine, Internet banking, trade financing, and other customary bank services, as well as securities and insurance products. As of February 28, 2018, it operated 41 branches in California; 12 branches in New York State; 3 branches in the Chicago, Illinois area; 3 branches in Washington State; 2 branches in Texas; and 1 each branch in Maryland, Massachusetts, Nevada, New Jersey, and Hong Kong, as well as 1 representative office in Taipei and Shanghai. The company was founded in 1962 and is headquartered in Los Angeles, California.

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