Cathay General Bancorp (NASDAQ:CATY – Get Free Report) and TFS Financial (NASDAQ:TFSL – Get Free Report) are both mid-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, institutional ownership, analyst recommendations, earnings, profitability, valuation and dividends.
Institutional and Insider Ownership
75.0% of Cathay General Bancorp shares are held by institutional investors. Comparatively, 9.8% of TFS Financial shares are held by institutional investors. 4.5% of Cathay General Bancorp shares are held by company insiders. Comparatively, 0.7% of TFS Financial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Profitability
This table compares Cathay General Bancorp and TFS Financial’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Cathay General Bancorp | 25.32% | 12.14% | 1.48% |
| TFS Financial | 12.36% | 5.32% | 0.58% |
Dividends
Cathay General Bancorp pays an annual dividend of $1.52 per share and has a dividend yield of 2.3%. TFS Financial pays an annual dividend of $1.27 per share and has a dividend yield of 7.6%. Cathay General Bancorp pays out 28.0% of its earnings in the form of a dividend. TFS Financial pays out 352.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Risk & Volatility
Cathay General Bancorp has a beta of 0.89, meaning that its share price is 11% less volatile than the S&P 500. Comparatively, TFS Financial has a beta of 0.7, meaning that its share price is 30% less volatile than the S&P 500.
Valuation & Earnings
This table compares Cathay General Bancorp and TFS Financial”s top-line 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 | 3.12 | $315.12 million | $5.42 | 11.95 |
| TFS Financial | $791.96 million | 5.92 | $90.96 million | $0.36 | 46.40 |
Cathay General Bancorp has higher revenue and earnings than TFS Financial. Cathay General Bancorp is trading at a lower price-to-earnings ratio than TFS Financial, indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
This is a summary of current ratings and target prices for Cathay General Bancorp and TFS Financial, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Cathay General Bancorp | 1 | 5 | 1 | 0 | 2.00 |
| TFS Financial | 0 | 3 | 1 | 0 | 2.25 |
Cathay General Bancorp currently has a consensus target price of $62.25, suggesting a potential downside of 3.92%. TFS Financial has a consensus target price of $19.00, suggesting a potential upside of 13.74%. Given TFS Financial’s stronger consensus rating and higher probable upside, analysts plainly believe TFS Financial is more favorable than Cathay General Bancorp.
Summary
Cathay General Bancorp beats TFS Financial on 10 of the 15 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 TFS Financial
TFS Financial Corporation, through its subsidiaries, provides retail consumer banking services in the United States. Its deposit products include savings, money market, checking, individual retirement, and other qualified plan accounts, as well as certificates of deposit. The company also provides residential real estate mortgage loans, residential construction loans, and home equity loans and lines of credit, as well as purchase mortgages and first mortgage refinance loans. In addition, it offers escrow and settlement services. The company provides its products and services through its main office in Cleveland, Ohio; and multiple full-service branches and loan production offices located throughout the states of Ohio and Florida. TFS Financial Corporation was founded in 1938 and is headquartered in Cleveland, Ohio. TFS Financial Corporation is a subsidiary of Third Federal Savings and Loan Association of Cleveland, MHC.
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