Contrasting First Hawaiian (NASDAQ:FHB) & Cathay General Bancorp (NASDAQ:CATY)

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

Analyst Ratings

This is a summary of recent ratings and target prices for First Hawaiian and Cathay General Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Hawaiian	4	3	0	0	1.43
Cathay General Bancorp	1	4	2	0	2.14

First Hawaiian currently has a consensus target price of $27.6429, indicating a potential upside of 15.81%. Cathay General Bancorp has a consensus target price of $49.7143, indicating a potential upside of 9.31%. Given First Hawaiian’s higher possible upside, research analysts clearly believe First Hawaiian is more favorable than Cathay General Bancorp.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
First Hawaiian	21.45%	9.29%	1.04%
Cathay General Bancorp	21.44%	10.39%	1.27%

Risk & Volatility

First Hawaiian has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500. Comparatively, Cathay General Bancorp has a beta of 0.97, suggesting that its stock price is 3% less volatile than the S&P 500.

Insider & Institutional Ownership

97.6% of First Hawaiian shares are held by institutional investors. Comparatively, 75.0% of Cathay General Bancorp shares are held by institutional investors. 0.6% of First Hawaiian shares are held by insiders. Comparatively, 4.8% 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 is poised for long-term growth.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Hawaiian	$1.17 billion	2.55	$230.13 million	$1.94	12.30
Cathay General Bancorp	$1.39 billion	2.29	$285.98 million	$4.14	10.99

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

Dividends

First Hawaiian pays an annual dividend of $1.04 per share and has a dividend yield of 4.4%. Cathay General Bancorp pays an annual dividend of $1.36 per share and has a dividend yield of 3.0%. First Hawaiian pays out 53.6% of its earnings in the form of a dividend. Cathay General Bancorp pays out 32.9% 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 First Hawaiian on 10 of the 16 factors compared between the two stocks.

About First Hawaiian

First Hawaiian, Inc. operates as a bank holding company for First Hawaiian Bank that provides a range of banking products and services to consumer and commercial customers in the United States. It operates in three segments: Retail Banking, Commercial Banking, and Treasury and Other. The company offers various deposit products, including checking, savings, and time deposit accounts, and other deposit accounts. It also provides residential and commercial mortgage loans, home equity lines of credit and loans, automobile loans and leases, secured and unsecured lines of credit, installment loans, small business loans and leases, and construction lending, as well as commercial lease and auto dealer financing. In addition, the company offers wealth management, personal installment, individual investment and financial planning, insurance protection, trust and estate, private banking, investment management, retirement planning, and merchant processing services, as well as consumer and commercial credit cards. The company was formerly known as BancWest Corporation and changed its name to First Hawaiian, Inc. in April 2016. First Hawaiian, Inc. was founded in 1858 and is headquartered in Honolulu, Hawaii.

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.