Waterstone Financial (NASDAQ: WSBF) and Canadian Imperial Bank of Commerce (NYSE:CM) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, risk, earnings, profitability, dividends, valuation and analyst recommendations.
Insider and Institutional Ownership
59.6% of Waterstone Financial shares are held by institutional investors. Comparatively, 44.5% of Canadian Imperial Bank of Commerce shares are held by institutional investors. 12.3% of Waterstone Financial 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.
This table compares Waterstone Financial and Canadian Imperial Bank of Commerce’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Canadian Imperial Bank of Commerce||22.45%||17.57%||0.86%|
Earnings and Valuation
This table compares Waterstone Financial and Canadian Imperial Bank of Commerce’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Waterstone Financial||$191.51 million||2.63||$25.96 million||$0.93||18.39|
|Canadian Imperial Bank of Commerce||$16.73 billion||2.37||$3.59 billion||$8.61||10.47|
Canadian Imperial Bank of Commerce has higher revenue and earnings than Waterstone Financial. Canadian Imperial Bank of Commerce is trading at a lower price-to-earnings ratio than Waterstone Financial, indicating that it is currently the more affordable of the two stocks.
This is a summary of current recommendations and price targets for Waterstone Financial and Canadian Imperial Bank of Commerce, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Canadian Imperial Bank of Commerce||1||2||4||0||2.43|
Waterstone Financial currently has a consensus target price of $19.00, suggesting a potential upside of 11.11%. Canadian Imperial Bank of Commerce has a consensus target price of $117.17, suggesting a potential upside of 29.93%. Given Canadian Imperial Bank of Commerce’s stronger consensus rating and higher possible upside, analysts plainly believe Canadian Imperial Bank of Commerce is more favorable than Waterstone Financial.
Waterstone Financial pays an annual dividend of $0.48 per share and has a dividend yield of 2.8%. Canadian Imperial Bank of Commerce pays an annual dividend of $4.22 per share and has a dividend yield of 4.7%. Waterstone Financial pays out 51.6% of its earnings in the form of a dividend. Canadian Imperial Bank of Commerce pays out 49.0% 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. Waterstone Financial has increased its dividend for 2 consecutive years. Canadian Imperial Bank of Commerce is clearly the better dividend stock, given its higher yield and lower payout ratio.
Risk and Volatility
Waterstone Financial has a beta of 0.12, indicating that its share price is 88% less volatile than the S&P 500. Comparatively, Canadian Imperial Bank of Commerce has a beta of 1.09, indicating that its share price is 9% more volatile than the S&P 500.
Canadian Imperial Bank of Commerce beats Waterstone Financial on 11 of the 17 factors compared between the two stocks.
About Waterstone Financial
Waterstone Financial, Inc. is the holding company of WaterStone Bank SSB (WaterStone Bank). WaterStone Bank is a community bank. The Company operates in two segments: community banking and mortgage banking. The community banking segment provides consumer and business banking products and services. Its consumer products include loan products, deposit products, and personal investment services. Its business banking products include loans for working capital, inventory and general corporate use, commercial real estate construction loans, and deposit accounts. The mortgage banking segment, which is conducted through Waterstone Mortgage Corporation, consists of originating residential mortgage loans primarily for sale in the secondary market. As of December 31, 2015, WaterStone Bank conducted its community banking business from 11 banking offices located in Milwaukee, Washington and Waukesha Counties, Wisconsin, as well as a loan production office in Minneapolis, Minnesota.
About Canadian Imperial Bank of Commerce
Canadian Imperial Bank of Commerce (CIBC) is a global financial institution. The Company provides a range of financial products and services to approximately 11 million individual, small business, commercial, corporate and institutional clients in Canada and around the world. The Company operates through three segments: Retail and Business Banking, Wealth Management and Capital Markets. The Company’s Retail and Business Banking segment provides personal and business clients across Canada with financial advice, products and services in its banking centers or through remote channels, such as mobile advisors, telephone, online or mobile banking. The Company’s Wealth Management segment provides advice and investment solutions. The Company’s Capital Markets segment provides integrated credit and global markets products, investment banking advisory services and research to corporate, government and institutional clients around the world.
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