East West Bancorp (NASDAQ:EWBC) vs. Industrial & Commercial Bank of China Ltd. (OTCMKTS:IDCBY) Critical Analysis

East West Bancorp (NASDAQ:EWBC) and Industrial & Commercial Bank of China Ltd. (OTCMKTS:IDCBY) are both large-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their analyst recommendations, earnings, profitability, valuation, risk, institutional ownership and dividends.

Profitability

This table compares East West Bancorp and Industrial & Commercial Bank of China Ltd.’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
East West Bancorp	30.45%	16.07%	1.75%
Industrial & Commercial Bank of China Ltd.	24.67%	8.75%	0.69%

Dividends

East West Bancorp pays an annual dividend of $3.20 per share and has a dividend yield of 2.5%. Industrial & Commercial Bank of China Ltd. pays an annual dividend of $0.67 per share and has a dividend yield of 3.5%. East West Bancorp pays out 30.8% of its earnings in the form of a dividend. Industrial & Commercial Bank of China Ltd. pays out 23.3% 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. East West Bancorp has raised its dividend for 8 consecutive years. Industrial & Commercial Bank of China Ltd. is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares East West Bancorp and Industrial & Commercial Bank of China Ltd.”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
East West Bancorp	$4.67 billion	3.72	$1.33 billion	$10.40	12.20
Industrial & Commercial Bank of China Ltd.	$208.16 billion	1.65	$51.27 billion	$2.88	6.71

Industrial & Commercial Bank of China Ltd. has higher revenue and earnings than East West Bancorp. Industrial & Commercial Bank of China Ltd. is trading at a lower price-to-earnings ratio than East West Bancorp, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

East West Bancorp has a beta of 0.98, meaning that its share price is 2% less volatile than the S&P 500. Comparatively, Industrial & Commercial Bank of China Ltd. has a beta of 0.09, meaning that its share price is 91% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and target prices for East West Bancorp and Industrial & Commercial Bank of China Ltd., as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
East West Bancorp	0	4	11	0	2.73
Industrial & Commercial Bank of China Ltd.	0	0	0	1	4.00

East West Bancorp presently has a consensus price target of $143.62, indicating a potential upside of 13.19%. Given East West Bancorp’s higher probable upside, equities analysts clearly believe East West Bancorp is more favorable than Industrial & Commercial Bank of China Ltd..

Insider and Institutional Ownership

89.5% of East West Bancorp shares are held by institutional investors. 0.9% of East West Bancorp shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

East West Bancorp beats Industrial & Commercial Bank of China Ltd. on 12 of the 18 factors compared between the two stocks.

About East West Bancorp

East West Bancorp, Inc. operates as the bank holding company for East West Bank that provides a range of personal and commercial banking services to businesses and individuals in the United States. The company operates through three segments: Consumer and Business Banking, Commercial Banking, and Other. It accepts various deposit products, such as personal and business checking and savings accounts, money market, and time deposits. The company’s loan products include mortgage and home equity, commercial and residential real estate, working capital lines of credit, construction finance, trade finance, letters of credit, commercial business, affordable housing loans, asset-based lending, asset-backed finance, project finance, loan syndication, and equipment financing, as well as financing services for clients to facilitate their business transactions between the United States and Asia. It also provides various wealth management, treasury management, foreign exchange, and interest rate and commodity risk hedging services; and mobile and online banking services. The company was founded in 1973 and is headquartered in Pasadena, California.

About Industrial & Commercial Bank of China Ltd.

Industrial and Commercial Bank of China Limited, together with its subsidiaries, provides banking products and services in the People's Republic of China and internationally. The company operates through Corporate Banking, Personal Banking, and Treasury Operations segments. The Corporate Banking segment offers financial products and services to corporations, government agencies, and financial institutions. Its products and services include trade financing, deposit, corporate wealth management, custody, and various corporate intermediary services, as well as corporate loans. Its Personal Banking segment provides financial products and services to individual customers. This segment's products and services comprise personal loans and cards, deposits, and personal wealth management and intermediary services. The Treasury Business segment is involved in the money market transactions, investment securities, and proprietary and foreign exchange transactions businesses. It also offers e-banking services, investment banking, financial leasing, and insurance services. Industrial and Commercial Bank of China Limited was incorporated in 1984 and is based in Beijing, the People's Republic of China.