Reviewing Hope Bancorp (NASDAQ:HOPE) and Sound Financial Bancorp (NASDAQ:SFBC)

Sound Financial Bancorp (NASDAQ:SFBC) and Hope Bancorp (NASDAQ:HOPE) are both small-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, profitability, institutional ownership, dividends, earnings and analyst recommendations.

Volatility & Risk

Sound Financial Bancorp has a beta of 0.23, meaning that its stock price is 77% less volatile than the S&P 500. Comparatively, Hope Bancorp has a beta of 0.89, meaning that its stock price is 11% less volatile than the S&P 500.

Dividends

Sound Financial Bancorp pays an annual dividend of $0.76 per share and has a dividend yield of 1.6%. Hope Bancorp pays an annual dividend of $0.56 per share and has a dividend yield of 5.0%. Sound Financial Bancorp pays out 39.0% of its earnings in the form of a dividend. Hope Bancorp pays out 71.8% 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.

Earnings & Valuation

This table compares Sound Financial Bancorp and Hope Bancorp”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sound Financial Bancorp	$62.03 million	1.93	$4.64 million	$1.95	23.91
Hope Bancorp	$1.00 billion	1.42	$99.63 million	$0.78	14.28

Hope Bancorp has higher revenue and earnings than Sound Financial Bancorp. Hope 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.

Analyst Recommendations

This is a summary of current ratings for Sound Financial Bancorp and Hope Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sound Financial Bancorp	0	0	0	0	0.00
Hope Bancorp	0	2	1	0	2.33

Hope Bancorp has a consensus target price of $13.50, indicating a potential upside of 21.24%. Given Hope Bancorp’s stronger consensus rating and higher probable upside, analysts clearly believe Hope Bancorp is more favorable than Sound Financial Bancorp.

Insider and Institutional Ownership

68.9% of Sound Financial Bancorp shares are owned by institutional investors. Comparatively, 84.0% of Hope Bancorp shares are owned by institutional investors. 12.6% of Sound Financial Bancorp shares are owned by insiders. Comparatively, 5.2% of Hope Bancorp shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Sound Financial Bancorp and Hope Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sound Financial Bancorp	8.12%	4.89%	0.48%
Hope Bancorp	9.82%	4.60%	0.57%

Summary

Hope Bancorp beats Sound Financial Bancorp on 10 of the 17 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 Hope Bancorp

Hope Bancorp, Inc. operates as the bank holding company for Bank of Hope that provides retail and commercial banking services for businesses and individuals in the United States. It accepts personal and business checking, money market, savings, time deposit, and individual retirement accounts. The company also offers loans comprising commercial and industrial loans to businesses for various purposes, such as working capital, purchasing inventory, debt refinancing, business acquisitions, international trade finance, other business-related financing, and loans syndication services; commercial real estate loans; residential mortgage loans; small business administration loans; and consumer loans, such as single-family mortgage, home equity, automobile, credit card, and personal loans. In addition, it provides internet banking and bill-pay, remote deposit capture, lock box, and ACH origination services; treasury management services; foreign currency exchange transactions; interest rate contracts and wealth management services; automated teller machine services; and engages in investment activities. Hope Bancorp, Inc. was founded in 1986 and is headquartered in Los Angeles, California.