Guaranty Federal Bancshares (GFED) & East West Bancorp (EWBC) Critical Contrast
Guaranty Federal Bancshares (NASDAQ: GFED) and East West Bancorp (NASDAQ:EWBC) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, risk, institutional ownership, profitability, earnings, dividends and valuation.
Earnings & Valuation
This table compares Guaranty Federal Bancshares and East West Bancorp’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Guaranty Federal Bancshares||$25.85 million||3.87||$6.06 million||$1.37||16.53|
|East West Bancorp||$1.22 billion||6.57||$504.25 million||$3.49||15.89|
East West Bancorp has higher revenue and earnings than Guaranty Federal Bancshares. East West Bancorp is trading at a lower price-to-earnings ratio than Guaranty Federal Bancshares, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
Guaranty Federal Bancshares has a beta of 0.6, suggesting that its stock price is 40% less volatile than the S&P 500. Comparatively, East West Bancorp has a beta of 1.43, suggesting that its stock price is 43% more volatile than the S&P 500.
Guaranty Federal Bancshares pays an annual dividend of $0.40 per share and has a dividend yield of 1.8%. East West Bancorp pays an annual dividend of $0.80 per share and has a dividend yield of 1.4%. Guaranty Federal Bancshares pays out 29.2% of its earnings in the form of a dividend. East West Bancorp pays out 22.9% 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.
Insider & Institutional Ownership
25.8% of Guaranty Federal Bancshares shares are owned by institutional investors. Comparatively, 91.3% of East West Bancorp shares are owned by institutional investors. 12.5% of Guaranty Federal Bancshares shares are owned by company insiders. Comparatively, 0.9% of East West Bancorp shares are owned 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.
This table compares Guaranty Federal Bancshares and East West Bancorp’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Guaranty Federal Bancshares||18.91%||8.51%||0.85%|
|East West Bancorp||34.63%||13.31%||1.34%|
This is a breakdown of recent ratings and target prices for Guaranty Federal Bancshares and East West Bancorp, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Guaranty Federal Bancshares||0||0||0||0||N/A|
|East West Bancorp||2||4||3||0||2.11|
East West Bancorp has a consensus price target of $62.86, indicating a potential upside of 13.38%. Given East West Bancorp’s higher possible upside, analysts plainly believe East West Bancorp is more favorable than Guaranty Federal Bancshares.
East West Bancorp beats Guaranty Federal Bancshares on 13 of the 15 factors compared between the two stocks.
About Guaranty Federal Bancshares
Guaranty Federal Bancshares, Inc. is the savings and loan holding company for Guaranty Federal Savings Bank (the Bank). The Company operates through banking operation segment. The banking segment is engaged in the business of originating mortgage loans secured by one- to four-family residences, multi-family, construction, commercial and consumer loans. The Bank’s primary market areas are Greene and Christian Counties, which are in the southwestern corner of Missouri, and includes the cities of Springfield, Nixa and Ozark, and Missouri. The Bank’s loan portfolio consists of mortgage loans, including one- to four-family loans, multi-family loans, construction loans and commercial real estate loans; commercial business loans, and consumer loans. The Bank invests in mortgage-backed securities, the United States Government and federal agency securities, and other marketable securities. The Company owns Guaranty Statutory Trust I and Guaranty Statutory Trust II.
About East West Bancorp
East West Bancorp, Inc. is a bank holding company. The Company’s principal business is to serve as a holding company for East West Bank (the Bank) and other banking or banking-related subsidiaries. The Bank is a California state-chartered bank, which operates in the United States and Greater China. The Bank provides a range of personal and commercial banking services to businesses, business executives, professionals, and other individuals. It operates through three segments: Retail Banking, Commercial Banking and Other. The Retail Banking segment focuses primarily on retail operations through the Bank’s branch network. The Commercial Banking segment primarily generates commercial and industrial (C&I) loans and commercial real estate (CRE) loans through the domestic commercial lending operations in California, New York, Texas, Washington, Massachusetts, Nevada and Georgia, and through the foreign commercial lending operations in China and Hong Kong.
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