CPB (NYSE:CPF) & Hanmi Financial (NASDAQ:HAFC) Critical Comparison

CPB (NYSE:CPF) and Hanmi Financial (NASDAQ:HAFC) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, profitability, analyst recommendations, valuation, institutional ownership, risk and dividends.

Dividends

CPB pays an annual dividend of $1.12 per share and has a dividend yield of 3.4%. Hanmi Financial pays an annual dividend of $1.08 per share and has a dividend yield of 3.7%. CPB pays out 46.1% of its earnings in the form of a dividend. Hanmi Financial pays out 45.2% 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. CPB has increased its dividend for 1 consecutive years and Hanmi Financial has increased its dividend for 1 consecutive years. Hanmi Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

CPB has a beta of 0.95, indicating that its stock price is 5% less volatile than the S&P 500. Comparatively, Hanmi Financial has a beta of 0.72, indicating that its stock price is 28% less volatile than the S&P 500.

Profitability

This table compares CPB and Hanmi Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CPB	18.66%	13.28%	1.01%
Hanmi Financial	16.53%	9.59%	0.93%

Valuation and Earnings

This table compares CPB and Hanmi Financial”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CPB	$344.82 million	2.55	$53.41 million	$2.43	13.50
Hanmi Financial	$430.37 million	2.06	$62.20 million	$2.39	12.36

Hanmi Financial has higher revenue and earnings than CPB. Hanmi Financial is trading at a lower price-to-earnings ratio than CPB, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

88.4% of CPB shares are owned by institutional investors. Comparatively, 88.7% of Hanmi Financial shares are owned by institutional investors. 2.4% of CPB shares are owned by insiders. Comparatively, 1.9% of Hanmi Financial shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for CPB and Hanmi Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CPB	0	1	2	0	2.67
Hanmi Financial	0	3	2	0	2.40

CPB currently has a consensus target price of $34.50, indicating a potential upside of 5.15%. Hanmi Financial has a consensus target price of $28.50, indicating a potential downside of 3.55%. Given CPB’s stronger consensus rating and higher probable upside, analysts plainly believe CPB is more favorable than Hanmi Financial.

Summary

CPB beats Hanmi Financial on 10 of the 15 factors compared between the two stocks.

About CPB

Central Pacific Financial Corp. operates as the bank holding company for Central Pacific Bank that provides a range of commercial banking products and services to businesses, professionals, and individuals in the United States. It offers various deposit products and services, including checking, savings and time deposits, cash management and digital banking, trust, and retail brokerage services, as well as money market accounts and certificates of deposit. The company also provides various lending activities, such as commercial, commercial and residential mortgage, home equity, and consumer loans; and other products and services comprising debit cards, internet and mobile banking, cash management services, full-service ATMs, safe deposit boxes, international banking services, night depository facilities, foreign exchange, and wire transfers. In addition, it offers wealth management products and services that include non-deposit investment products, annuities, insurance, investment management, asset custody and general consultation, and planning services. The company was founded in 1954 and is headquartered in Honolulu, Hawaii.

About Hanmi Financial

Hanmi Financial Corporation operates as the holding company for Hanmi Bank that provides business banking products and services in the United States. It offers various deposit products, including noninterest-bearing checking accounts, savings accounts, negotiable order of withdrawal accounts, money market accounts, and certificates of deposit. The company also provides real estate loans, such as commercial property, construction, and residential property loans; and commercial and industrial loans, such as commercial term loans and commercial lines of credit; and international finance and trade services and products, such as letters of credit, and import and export financing. In addition, it offers small business administration loans for business purposes, which comprise owner-occupied commercial real estate, business acquisitions, start-ups, franchise financing, working capital, improvements and renovations, inventory and equipment, and debt-refinancing, as well as equipment lease financing. The company was founded in 1982 and is headquartered in Los Angeles, California.