Head-To-Head Analysis: First Financial Bankshares (NASDAQ:FFIN) & Hanmi Financial (NASDAQ:HAFC)

First Financial Bankshares (NASDAQ:FFIN) and Hanmi Financial (NASDAQ:HAFC) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, profitability, dividends, analyst recommendations, valuation, risk and institutional ownership.

Profitability

This table compares First Financial Bankshares and Hanmi Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Financial Bankshares	33.16%	14.91%	1.89%
Hanmi Financial	20.06%	11.30%	1.15%

Dividends

First Financial Bankshares pays an annual dividend of $0.88 per share and has a dividend yield of 2.9%. Hanmi Financial pays an annual dividend of $1.12 per share and has a dividend yield of 3.4%. First Financial Bankshares pays out 43.3% of its earnings in the form of a dividend. Hanmi Financial pays out 36.8% 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. First Financial Bankshares has increased its dividend for 15 consecutive years and Hanmi Financial has increased its dividend for 1 consecutive years. Hanmi Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares First Financial Bankshares and Hanmi Financial”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Financial Bankshares	$833.20 million	5.23	$253.58 million	$2.03	14.98
Hanmi Financial	$444.90 million	2.18	$76.09 million	$3.04	10.75

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

Institutional & Insider Ownership

69.8% of First Financial Bankshares shares are held by institutional investors. Comparatively, 88.7% of Hanmi Financial shares are held by institutional investors. 3.8% of First Financial Bankshares shares are held by company insiders. Comparatively, 2.1% of Hanmi Financial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current recommendations and price targets for First Financial Bankshares and Hanmi Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Financial Bankshares	0	6	0	1	2.29
Hanmi Financial	0	4	2	0	2.33

First Financial Bankshares currently has a consensus target price of $35.20, indicating a potential upside of 15.75%. Hanmi Financial has a consensus target price of $33.40, indicating a potential upside of 2.20%. Given First Financial Bankshares’ higher possible upside, analysts plainly believe First Financial Bankshares is more favorable than Hanmi Financial.

Volatility and Risk

First Financial Bankshares has a beta of 0.8, meaning that its share price is 20% less volatile than the S&P 500. Comparatively, Hanmi Financial has a beta of 0.72, meaning that its share price is 28% less volatile than the S&P 500.

Summary

First Financial Bankshares beats Hanmi Financial on 12 of the 18 factors compared between the two stocks.

About First Financial Bankshares

First Financial Bankshares, Inc., through its subsidiaries, provides commercial banking products and services in Texas. The company offers checking, savings and time deposits; automated teller machines, drive-in, and night deposit services; safe deposit facilities, remote deposit capture, internet banking, mobile banking, payroll cards, funds transfer, and performing other customary commercial banking services; securities brokerage services; and trust and wealth management services, including wealth management, estates administration, oil and gas management, testamentary trusts, revocable and irrevocable trusts, and agency accounts. It also provides commercial and industrial, municipal, agricultural, construction and development, farm, residential, and consumer auto and non-auto, as well as non-owner occupied and owner occupied commercial real estate loans. In addition, the company offers advisory and specialized services related to asset management, investing, purchasing, advertising, public relations, and technology services. First Financial Bankshares, Inc. was founded in 1890 and is headquartered in Abilene, Texas.

About Hanmi Financial

Hanmi Financial Corporation operates as the holding company for Hanmi Bank that provides business banking products and services in the United States. It offers various deposit products, including noninterest-bearing checking accounts, savings accounts, negotiable order of withdrawal accounts, money market accounts, and certificates of deposit. The company also provides real estate loans, such as commercial property, construction, and residential property loans; and commercial and industrial loans, such as commercial term loans and commercial lines of credit; and international finance and trade services and products, such as letters of credit, and import and export financing. In addition, it offers small business administration loans for business purposes, which comprise owner-occupied commercial real estate, business acquisitions, start-ups, franchise financing, working capital, improvements and renovations, inventory and equipment, and debt-refinancing, as well as equipment lease financing. The company was founded in 1982 and is headquartered in Los Angeles, California.