Sound Financial Bancorp (NASDAQ:SFBC) and Cathay General Bancorp (NASDAQ:CATY) Head-To-Head Review
by Sarita Garza · The Markets DailySound Financial Bancorp (NASDAQ:SFBC – Get Free Report) and Cathay General Bancorp (NASDAQ:CATY – Get Free Report) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, valuation, risk, dividends, analyst recommendations, institutional ownership and earnings.
Insider and Institutional Ownership
68.8% of Sound Financial Bancorp shares are held by institutional investors. Comparatively, 75.0% of Cathay General Bancorp shares are held by institutional investors. 12.3% of Sound Financial Bancorp shares are held by insiders. Comparatively, 4.5% of Cathay General Bancorp shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
Risk and Volatility
Sound Financial Bancorp has a beta of 0.01, indicating that its share price is 99% less volatile than the S&P 500. Comparatively, Cathay General Bancorp has a beta of 0.86, indicating that its share price is 14% less volatile than the S&P 500.
Analyst Recommendations
This is a breakdown of current ratings and target prices for Sound Financial Bancorp and Cathay General Bancorp, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Sound Financial Bancorp | 0 | 1 | 0 | 0 | 2.00 |
| Cathay General Bancorp | 1 | 3 | 1 | 1 | 2.33 |
Cathay General Bancorp has a consensus target price of $60.75, suggesting a potential downside of 3.45%. Given Cathay General Bancorp’s stronger consensus rating and higher probable upside, analysts plainly believe Cathay General Bancorp is more favorable than Sound Financial Bancorp.
Profitability
This table compares Sound Financial Bancorp and Cathay General Bancorp’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Sound Financial Bancorp | 12.19% | 6.99% | 0.70% |
| Cathay General Bancorp | 24.66% | 11.71% | 1.43% |
Dividends
Sound Financial Bancorp pays an annual dividend of $0.84 per share and has a dividend yield of 1.9%. Cathay General Bancorp pays an annual dividend of $1.52 per share and has a dividend yield of 2.4%. Sound Financial Bancorp pays out 28.7% of its earnings in the form of a dividend. Cathay General Bancorp pays out 29.7% 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. Sound Financial Bancorp has raised its dividend for 2 consecutive years.
Valuation & Earnings
This table compares Sound Financial Bancorp and Cathay General Bancorp”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Sound Financial Bancorp | $39.64 million | 2.92 | $7.16 million | $2.93 | 15.38 |
| Cathay General Bancorp | $1.38 billion | 3.05 | $315.12 million | $5.12 | 12.29 |
Cathay General Bancorp has higher revenue and earnings than Sound Financial Bancorp. Cathay General Bancorp is trading at a lower price-to-earnings ratio than Sound Financial Bancorp, indicating that it is currently the more affordable of the two stocks.
Summary
Cathay General Bancorp beats Sound Financial Bancorp on 14 of the 18 factors compared between the two stocks.
About Sound Financial Bancorp
Sound Financial Bancorp, Inc. operates as the bank holding company for Sound Community Bank that provides banking and other financial services for consumers and businesses. It accepts various deposits products comprising savings, money market deposit, NOW, and demand accounts, as well as certificates of deposit. The company also offers loans secured by first and second mortgages on one-to four-family residences; home equity loans, including fixed-rate loans and variable-rate lines of credit; commercial and multifamily real estate loans; construction loans secured by single-family residences, and commercial and multifamily real estate; land loans; commercial business loans to finance commercial vehicles and equipment, as well as loans secured by accounts receivable and/or inventory; and secured and unsecured consumer loans, such as new and used manufactured homes, floating homes, automobiles, boats, and recreational vehicle loans, and loans secured by deposit accounts. The company was founded in 1953 and is headquartered in Seattle, Washington.
About Cathay General Bancorp
Cathay General Bancorp operates as the holding company for Cathay Bank that offers various commercial banking products and services to individuals, professionals, and small to medium-sized businesses in the United States. The company offers various deposit products, including passbook accounts, checking accounts, money market deposit accounts, certificates of deposit, individual retirement accounts, and public funds deposits. It also provides loan products, such as commercial mortgage loans, commercial loans, small business administration loans, residential mortgage loans, real estate construction loans, and home equity lines of credit, as well as installment loans to individuals for household, and other consumer expenditures. In addition, the company offers trade financing, letter of credit, wire transfer, forward currency spot and forward contract, safe deposit, collection, automatic teller machine, Internet banking, investment, and other customary bank services, as well as securities and insurance products. Cathay General Bancorp was founded in 1962 and is headquartered in Los Angeles, California.