Contrasting Preferred Bank (PFBC) and HarborOne Bancorp (HONE)

Preferred Bank (NASDAQ: HONE) and HarborOne Bancorp (NASDAQ:HONE) are both small-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, valuation, risk, institutional ownership, analyst recommendations, earnings and profitability.

Profitability

This table compares Preferred Bank and HarborOne Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Preferred Bank 30.57% 17.86% 1.66%
HarborOne Bancorp 6.49% 3.18% 0.40%

Analyst Ratings

This is a breakdown of recent ratings for Preferred Bank and HarborOne Bancorp, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Preferred Bank 0 1 4 1 3.00
HarborOne Bancorp 0 2 0 0 2.00

Preferred Bank currently has a consensus price target of $73.50, suggesting a potential upside of 21.95%. HarborOne Bancorp has a consensus price target of $19.50, suggesting a potential downside of 0.46%. Given Preferred Bank’s stronger consensus rating and higher possible upside, analysts clearly believe Preferred Bank is more favorable than HarborOne Bancorp.

Institutional & Insider Ownership

88.3% of Preferred Bank shares are owned by institutional investors. Comparatively, 19.3% of HarborOne Bancorp shares are owned by institutional investors. 2.9% of HarborOne Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Dividends

Preferred Bank pays an annual dividend of $1.00 per share and has a dividend yield of 1.7%. HarborOne Bancorp does not pay a dividend. Preferred Bank pays out 29.2% of its earnings in the form of a dividend. Preferred Bank has increased its dividend for 3 consecutive years.

Earnings and Valuation

This table compares Preferred Bank and HarborOne Bancorp’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Preferred Bank $163.42 million 4.86 $43.39 million $3.42 17.62
HarborOne Bancorp $144.82 million 4.41 $10.37 million N/A N/A

Preferred Bank has higher revenue and earnings than HarborOne Bancorp.

Volatility and Risk

Preferred Bank has a beta of 0.95, indicating that its share price is 5% less volatile than the S&P 500. Comparatively, HarborOne Bancorp has a beta of 0.17, indicating that its share price is 83% less volatile than the S&P 500.

Summary

Preferred Bank beats HarborOne Bancorp on 14 of the 17 factors compared between the two stocks.

About Preferred Bank

Preferred Bank provides various commercial banking products and services to small and mid-sized businesses and their owners, entrepreneurs, real estate developers and investors, professionals, and high net worth individuals in the United States. The company's deposit products include checking, savings, negotiable order of withdrawal, and money market deposit accounts; fixed-rate and fixed maturity retail, and non-retail certificates of deposit; and individual retirement accounts. It also provides real estate mortgage loans that are secured by retail, industrial, office, special purpose, and residential single and multi-family properties; real estate construction loans; commercial loans comprising lines of credit for working capital and term loans for capital expenditures; and commercial and export letters of credit, import lines of credit, documentary collections, international wire transfers, export financing products, bills purchase programs, and acceptances/trust receipt financing products, as well as standby letters of credit and foreign exchange services for importers and exporters. In addition, it offers various high-wealth banking services to wealthy individuals residing in the Pacific Rim area with residences, real estate investments, or businesses in Southern California. Further, it provides various banking services to physicians, accountants, attorneys, business managers, and other professionals; and safe deposit boxes, account reconciliation, courier service, and cash management services to the manufacturing, service, and distribution companies. Additionally, it offers remote deposit capture, and Internet and mobile banking services. As of December 31, 2017, it had 13 full-service branch offices in Alhambra, Arcadia, Century City, City of Industry, Diamond Bar, Los Angeles, Pico Rivera, San Francisco, Tarzana, Torrance, Anaheim, and Irvine, California; and Flushing, New York. The company was founded in 1991 and is headquartered in Los Angeles, California.

About HarborOne Bancorp

HarborOne Bancorp, Inc. operates as the holding company for HarborOne Bank that provides financial services to individuals, families, small and middle-market businesses, and municipalities throughout Southeastern New England. Its primary deposit products include checking, money market, savings, and term certificate of deposit accounts; and lending products comprise commercial real estate loans, commercial loans, construction loans, one- to four-family residential real estate loans, second mortgages and equity lines of credit, and auto and other consumer loans. The company, through its subsidiary, Merrimack Mortgage Company, LLC, also originates, sells, and services residential mortgage loans. As of December 31, 2017, it operated 14 full-service branches, 2 limited service branches, 1 commercial loan office, 1 lending office, and 13 free-standing ATMs. In addition, the company offers a range of educational services through ?HarborOne U,' with classes on small business, financial literacy, and personal enrichment. HarborOne Bancorp, Inc. was founded in 1917 and is based in Brockton, Massachusetts. HarborOne Bancorp, Inc. is a subsidiary of Harborone Mutual Bancshares, Mhc.

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