People’s United Financial (NASDAQ: PBCT) and Cathay General Bancorp (NASDAQ:CATY) are both mid-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, risk, dividends, profitability, valuation, earnings and institutional ownership.

Risk and Volatility

People’s United Financial has a beta of 0.82, meaning that its stock price is 18% less volatile than the S&P 500. Comparatively, Cathay General Bancorp has a beta of 1.29, meaning that its stock price is 29% more volatile than the S&P 500.

Dividends

People’s United Financial pays an annual dividend of $0.69 per share and has a dividend yield of 4.2%. Cathay General Bancorp pays an annual dividend of $0.84 per share and has a dividend yield of 2.4%. People’s United Financial pays out 77.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Cathay General Bancorp pays out 34.6% of its earnings in the form of a dividend. Cathay General Bancorp has increased its dividend for 10 consecutive years.

Earnings and Valuation

This table compares People’s United Financial and Cathay General Bancorp’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
People’s United Financial $1.34 billion 4.14 $300.38 million $0.89 18.48
Cathay General Bancorp $475.33 million 5.94 $196.31 million $2.43 14.38

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

Analyst Ratings

This is a breakdown of current recommendations for People’s United Financial and Cathay General Bancorp, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
People’s United Financial 2 9 0 0 1.82
Cathay General Bancorp 0 3 2 0 2.40

People’s United Financial currently has a consensus target price of $18.31, indicating a potential upside of 11.28%. Cathay General Bancorp has a consensus target price of $40.20, indicating a potential upside of 15.05%. Given Cathay General Bancorp’s stronger consensus rating and higher probable upside, analysts clearly believe Cathay General Bancorp is more favorable than People’s United Financial.

Profitability

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

Net Margins Return on Equity Return on Assets
People’s United Financial 18.88% 6.14% 0.75%
Cathay General Bancorp 35.30% 10.54% 1.36%

Insider and Institutional Ownership

77.0% of People’s United Financial shares are held by institutional investors. Comparatively, 67.8% of Cathay General Bancorp shares are held by institutional investors. 2.7% of People’s United Financial shares are held by company insiders. Comparatively, 5.8% of Cathay General Bancorp shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

Cathay General Bancorp beats People’s United Financial on 12 of the 17 factors compared between the two stocks.

About People’s United Financial

People’s United Financial, Inc. is a bank holding company and a financial holding company of People’s United Bank (the Bank). The Bank is engaged in providing commercial banking, retail banking and wealth management services to individual, corporate and municipal customers. The Company operates through two segments: Commercial Banking and Retail Banking. Commercial Banking segment is engaged in commercial real estate lending, commercial and industrial lending, and commercial deposit gathering activities. It offers cash management, correspondent banking, municipal banking, institutional trust services, corporate trust, insurance services and private banking, among others. Retail Banking segment provides consumer lending (including residential mortgage and home equity lending) and consumer deposit gathering activities. The Retail Banking segment also includes brokerage, financial advisory services, investment management services, and life insurance and non-institutional trust services.

About Cathay General Bancorp

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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