Porter Bancorp (NASDAQ: PBIB) and Cathay General Bancorp (NASDAQ:CATY) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, dividends, risk, institutional ownership, valuation, profitabiliy and analyst recommendations.

Dividends

Cathay General Bancorp pays an annual dividend of $0.84 per share and has a dividend yield of 2.2%. Porter Bancorp does not pay a dividend. Cathay General Bancorp pays out 37.7% of its earnings in the form of a dividend.

Insider and Institutional Ownership

18.4% of Porter Bancorp shares are owned by institutional investors. Comparatively, 68.2% of Cathay General Bancorp shares are owned by institutional investors. 28.7% of Porter Bancorp shares are owned by insiders. Comparatively, 5.8% of Cathay General Bancorp shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Porter Bancorp $36.05 million 1.70 -$2.74 million ($0.45) -22.33
Cathay General Bancorp $467.81 million 6.50 $178.03 million $2.23 17.07

Cathay General Bancorp has higher revenue and earnings than Porter Bancorp. Porter Bancorp 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.

Analyst Recommendations

This is a summary of current ratings for Porter Bancorp and Cathay General Bancorp, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Porter Bancorp 0 0 0 0 N/A
Cathay General Bancorp 0 2 1 0 2.33

Cathay General Bancorp has a consensus target price of $39.33, suggesting a potential upside of 3.32%. Given Cathay General Bancorp’s higher probable upside, analysts plainly believe Cathay General Bancorp is more favorable than Porter Bancorp.

Profitability

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

Net Margins Return on Equity Return on Assets
Porter Bancorp -6.37% -7.18% -0.27%
Cathay General Bancorp 32.94% 9.83% 1.26%

Risk and Volatility

Porter Bancorp has a beta of 1.72, indicating that its share price is 72% more volatile than the S&P 500. Comparatively, Cathay General Bancorp has a beta of 1.28, indicating that its share price is 28% more volatile than the S&P 500.

Summary

Cathay General Bancorp beats Porter Bancorp on 11 of the 14 factors compared between the two stocks.

Porter Bancorp Company Profile

Porter Bancorp, Inc. is a bank holding company. The Company operates through its subsidiary, PBI Bank (the Bank). The Bank is a community bank with a range of commercial and personal banking products. It offers retail and commercial deposit products. It offers drive-in banking facilities, automatic teller machines, night depository, personalized checks, credit cards, debit cards, Internet banking, mobile banking, treasury management services, remote deposit services, electronic funds transfers through automated clearing house services, domestic and foreign wire transfers, cash management, vault services, and loan and deposit sweep accounts. It operates banking offices in approximately 12 counties in Kentucky. Its markets include metropolitan Louisville in Jefferson County and the surrounding counties of Henry and Bullitt. It serves south central Kentucky and southern Kentucky from banking offices in Butler, Green, Hart, Edmonson, Barren, Warren, Ohio and Daviess Counties.

Cathay General Bancorp Company Profile

Cathay General Bancorp is a bank holding company. The Company holds Cathay Bank, a California state-chartered commercial bank (the Bank); seven limited partnerships investing in affordable housing investments; GBC Venture Capital, Inc., and Asia Realty Corp. The Company also owns the common stock of five statutory business trusts created for issuing capital securities. The Bank primarily services individuals, professionals and small to medium-sized businesses in the local markets and provides commercial mortgage loans, commercial loans, small business administration (SBA) loans, residential mortgage loans, real estate construction loans, home equity lines of credit and installment loans to individuals for automobile, household and other consumer expenditures. The Bank offers passbook accounts, checking accounts, money market deposit accounts, certificates of deposit, individual retirement accounts, college certificates of deposit and public funds deposits.

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