Walter Investment Management Corp. (NYSE: WAC) and Cathay General Bancorp (NASDAQ:CATY) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, institutional ownership, risk, earnings, dividends and valuation.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Walter Investment Management Corp. and Cathay General Bancorp, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Walter Investment Management Corp. 1 1 0 0 1.50
Cathay General Bancorp 0 3 2 0 2.40

Walter Investment Management Corp. currently has a consensus price target of $1.13, suggesting a potential upside of 150.00%. Cathay General Bancorp has a consensus price target of $40.20, suggesting a potential upside of 9.87%. Given Walter Investment Management Corp.’s higher possible upside, analysts plainly believe Walter Investment Management Corp. is more favorable than Cathay General Bancorp.

Volatility & Risk

Walter Investment Management Corp. has a beta of 0.61, indicating that its share price is 39% less volatile than the S&P 500. Comparatively, Cathay General Bancorp has a beta of 1.29, indicating that its share price is 29% more volatile than the S&P 500.

Earnings & Valuation

This table compares Walter Investment Management Corp. and Cathay General Bancorp’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Walter Investment Management Corp. $947.12 million 0.02 -$217.78 million ($5.96) -0.08
Cathay General Bancorp $475.33 million 6.22 $196.31 million $2.43 15.06

Cathay General Bancorp has higher revenue, but lower earnings than Walter Investment Management Corp.. Walter Investment Management Corp. 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.

Dividends

Cathay General Bancorp pays an annual dividend of $0.84 per share and has a dividend yield of 2.3%. Walter Investment Management Corp. does not pay a dividend. Cathay General Bancorp pays out 34.6% of its earnings in the form of a dividend.

Profitability

This table compares Walter Investment Management Corp. and Cathay General Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Walter Investment Management Corp. -18.10% -796.24% -0.52%
Cathay General Bancorp 35.30% 10.54% 1.36%

Institutional and Insider Ownership

56.5% of Walter Investment Management Corp. shares are held by institutional investors. Comparatively, 67.8% of Cathay General Bancorp shares are held by institutional investors. 46.6% of Walter Investment Management Corp. shares are held by insiders. Comparatively, 5.8% of Cathay General Bancorp shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Summary

Cathay General Bancorp beats Walter Investment Management Corp. on 11 of the 15 factors compared between the two stocks.

About Walter Investment Management Corp.

Walter Investment Management Corp. is a diversified mortgage banking firm focused primarily on the servicing and origination of residential loans, including reverse loans. The Company operates through three segments: Servicing, Originations and Reverse Mortgage. The Servicing segment consists of operations that perform servicing for third-party credit owners of mortgage loans, as well as its own mortgage loan portfolio. The Servicing segment also includes Insurance, and Loans and Residuals businesses. The Originations segment consists of operations that originate and purchase mortgage loans that are intended for sale to third parties. The Reverse Mortgage segment consists of operations which purchases and originates home equity conversion mortgage that are securitized, but remain on the consolidated balance sheet as collateral for secured borrowings.

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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