Old Second Bancorp (NASDAQ: OSBC) and Central Pacific Financial (NYSE:CPF) are both small-cap financials companies, but which is the better investment? We will compare the two businesses based on the strength of their analyst recommendations, risk, dividends, profitability, earnings, institutional ownership and valuation.
Volatility & Risk
Old Second Bancorp has a beta of 1.27, suggesting that its stock price is 27% more volatile than the S&P 500. Comparatively, Central Pacific Financial has a beta of 1.19, suggesting that its stock price is 19% more volatile than the S&P 500.
This table compares Old Second Bancorp and Central Pacific Financial’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Old Second Bancorp||$101.95 million||4.19||$15.68 million||$0.50||28.80|
|Central Pacific Financial||$219.06 million||4.11||$41.20 million||$1.34||22.40|
Central Pacific Financial has higher revenue and earnings than Old Second Bancorp. Central Pacific Financial is trading at a lower price-to-earnings ratio than Old Second Bancorp, indicating that it is currently the more affordable of the two stocks.
This table compares Old Second Bancorp and Central Pacific Financial’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Old Second Bancorp||19.91%||12.34%||0.99%|
|Central Pacific Financial||18.81%||9.56%||0.88%|
This is a summary of recent ratings for Old Second Bancorp and Central Pacific Financial, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Old Second Bancorp||0||1||2||0||2.67|
|Central Pacific Financial||0||1||0||0||2.00|
Old Second Bancorp currently has a consensus target price of $12.25, suggesting a potential downside of 14.93%. Central Pacific Financial has a consensus target price of $32.50, suggesting a potential upside of 8.30%. Given Central Pacific Financial’s higher probable upside, analysts clearly believe Central Pacific Financial is more favorable than Old Second Bancorp.
Institutional and Insider Ownership
68.6% of Old Second Bancorp shares are owned by institutional investors. Comparatively, 92.1% of Central Pacific Financial shares are owned by institutional investors. 3.2% of Old Second Bancorp shares are owned by company insiders. Comparatively, 4.1% of Central Pacific Financial shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
Old Second Bancorp pays an annual dividend of $0.04 per share and has a dividend yield of 0.3%. Central Pacific Financial pays an annual dividend of $0.72 per share and has a dividend yield of 2.4%. Old Second Bancorp pays out 8.0% of its earnings in the form of a dividend. Central Pacific Financial pays out 53.7% 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. Central Pacific Financial has increased its dividend for 2 consecutive years. Central Pacific Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Old Second Bancorp beats Central Pacific Financial on 9 of the 17 factors compared between the two stocks.
About Old Second Bancorp
Old Second Bancorp, Inc. is a bank holding company. The Company conducts a full service community banking and trust business through its subsidiaries, including Old Second National Bank (the Bank), Old Second Capital Trust I, Old Second Capital Trust II and Old Second Affordable Housing Fund, L.L.C. The Bank’s full service banking businesses include the customary consumer and commercial products and services that banking institutions provide, including demand, negotiable order of withdrawal, money market and individual retirement accounts; commercial, industrial, consumer and real estate lending, including installment loans, agricultural loans, lines of credit and overdraft checking; safe deposit operations, and a range of additional services tailored to the needs of individual customers, such as the acquisition of the United States Treasury notes and bonds, money orders, cashiers’ checks and foreign currency, direct deposit, debit cards, credit cards and other special services.
About Central Pacific Financial
Central Pacific Financial Corp. is the bank holding company of Central Pacific Bank (the Bank). The Company’s segments include Banking Operations, Treasury and All Others. The Banking Operations segment includes construction and real estate development lending, commercial lending, residential mortgage lending, consumer lending, trust services, retail brokerage services and its retail branch offices, which provide a range of deposit and loan products, as well as various other banking services. The Treasury segment is responsible for managing the Company’s investment securities portfolio and wholesale funding activities. The All Others segment includes activities, such as electronic banking, data processing and management of Bank-owned properties. The Company also offers wealth management products and services, such as non-deposit investment products, annuities, insurance, investment management, asset custody, and general consultation and planning services.
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