Bank Mutual Corporation (NASDAQ: BKMU) and Hope Bancorp (NASDAQ:HOPE) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, dividends, risk, valuation, profitability, analyst recommendations and institutional ownership.

Earnings and Valuation

This table compares Bank Mutual Corporation and Hope Bancorp’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Bank Mutual Corporation $95.97 million 4.53 $16.54 million $0.36 26.32
Hope Bancorp $502.80 million 4.36 $147.53 million $1.09 14.88

Hope Bancorp has higher revenue and earnings than Bank Mutual Corporation. Hope Bancorp is trading at a lower price-to-earnings ratio than Bank Mutual Corporation, indicating that it is currently the more affordable of the two stocks.

Dividends

Bank Mutual Corporation pays an annual dividend of $0.22 per share and has a dividend yield of 2.3%. Hope Bancorp pays an annual dividend of $0.52 per share and has a dividend yield of 3.2%. Bank Mutual Corporation pays out 61.1% of its earnings in the form of a dividend. Hope Bancorp pays out 47.7% 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. Hope Bancorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of current ratings and target prices for Bank Mutual Corporation and Hope Bancorp, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Bank Mutual Corporation 0 3 0 0 2.00
Hope Bancorp 0 3 0 0 2.00

Bank Mutual Corporation presently has a consensus target price of $9.38, indicating a potential downside of 1.06%. Hope Bancorp has a consensus target price of $19.67, indicating a potential upside of 21.29%. Given Hope Bancorp’s higher probable upside, analysts clearly believe Hope Bancorp is more favorable than Bank Mutual Corporation.

Insider & Institutional Ownership

56.1% of Bank Mutual Corporation shares are held by institutional investors. Comparatively, 79.5% of Hope Bancorp shares are held by institutional investors. 10.0% of Bank Mutual Corporation shares are held by insiders. Comparatively, 5.2% of Hope Bancorp shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Risk and Volatility

Bank Mutual Corporation has a beta of 0.56, meaning that its stock price is 44% less volatile than the S&P 500. Comparatively, Hope Bancorp has a beta of 1.39, meaning that its stock price is 39% more volatile than the S&P 500.

Profitability

This table compares Bank Mutual Corporation and Hope Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Bank Mutual Corporation 14.77% 5.67% 0.61%
Hope Bancorp 24.38% 8.45% 1.17%

Summary

Hope Bancorp beats Bank Mutual Corporation on 11 of the 14 factors compared between the two stocks.

About Bank Mutual Corporation

Bank Mutual Corporation is a savings and loan holding company. The Company owns Bank Mutual (the Bank), a federally-chartered savings bank. The Bank is engaged in the business of community banking, which includes attracting deposits from and making loans to the general public and private businesses, as well as governmental and non-profit entities. In addition to deposits, the Bank obtains funds through borrowings from the Federal Home Loan Bank (FHLB) of Chicago. These funding sources are used to originate loans, including commercial and industrial loans, multi-family residential loans, non-residential commercial real estate loans, one- to four-family loans, home equity loans and other consumer loans. The Bank also purchases and/or participates in loans from third-party financial institutions and is a seller of residential loans in the secondary market. It also invests in mortgage-related and other investment securities.

About Hope Bancorp

Hope Bancorp, Inc., formerly BBCN Bancorp, Inc., is the holding company of Bank of Hope. Bank of Hope is the regional Korean-American bank in the United States. Bank of Hope operates approximately 85 full-service branches in California, Washington, Texas, Illinois, New York, New Jersey, Virginia, Georgia and Alabama. The Bank also operates small business administration (SBA) loan production offices in Seattle, Denver, Dallas, Atlanta, Northern California, Annandale, Virginia, Portland, Oregon and Fremont, California; residential mortgage loan production offices in California, and a representative office in Seoul, Korea. Bank of Hope specializes in business banking products for small and medium-sized businesses, with an emphasis in commercial real estate and commercial lending, SBA lending and international trade financing. Bank of Hope is a California-chartered bank, and its deposits are insured by the Federal Deposit Insurance Corporation (FDIC).

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