Analyzing WaFd (NASDAQ:WAFD) and Cathay General Bancorp (NASDAQ:CATY)

WaFd (NASDAQ:WAFD) and Cathay General Bancorp (NASDAQ:CATY) are both mid-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, risk, profitability, valuation, dividends and earnings.

Risk and Volatility

WaFd has a beta of 0.93, indicating that its stock price is 7% less volatile than the S&P 500. Comparatively, Cathay General Bancorp has a beta of 1, indicating that its stock price has a similar volatility profile to the S&P 500.

Valuation and Earnings

This table compares WaFd and Cathay General Bancorp”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
WaFd	$725.85 million	3.31	$200.04 million	$2.63	11.59
Cathay General Bancorp	$1.39 billion	2.38	$285.98 million	$4.14	11.58

Cathay General Bancorp has higher revenue and earnings than WaFd. Cathay General Bancorp is trading at a lower price-to-earnings ratio than WaFd, indicating that it is currently the more affordable of the two stocks.

Dividends

WaFd pays an annual dividend of $1.08 per share and has a dividend yield of 3.5%. Cathay General Bancorp pays an annual dividend of $1.36 per share and has a dividend yield of 2.8%. WaFd pays out 41.1% of its earnings in the form of a dividend. Cathay General Bancorp pays out 32.9% 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. WaFd has increased its dividend for 2 consecutive years. WaFd is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares WaFd and Cathay General Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
WaFd	15.57%	8.57%	0.85%
Cathay General Bancorp	21.44%	10.39%	1.27%

Institutional & Insider Ownership

83.7% of WaFd shares are held by institutional investors. Comparatively, 75.0% of Cathay General Bancorp shares are held by institutional investors. 1.5% of WaFd shares are held by company insiders. Comparatively, 4.8% of Cathay General Bancorp shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and recommmendations for WaFd and Cathay General Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
WaFd	0	4	0	0	2.00
Cathay General Bancorp	1	3	2	0	2.17

WaFd presently has a consensus target price of $32.25, suggesting a potential upside of 5.81%. Cathay General Bancorp has a consensus target price of $50.17, suggesting a potential upside of 4.64%. Given WaFd’s higher possible upside, equities research analysts plainly believe WaFd is more favorable than Cathay General Bancorp.

Summary

Cathay General Bancorp beats WaFd on 11 of the 17 factors compared between the two stocks.

About WaFd

WaFd, Inc operates as the bank holding company for Washington Federal Bank that provides lending, depository, insurance, and other banking services in the United States. The company offers deposit products, including business and personal checking accounts, and term certificates of deposit, as well as money market accounts and passbook savings accounts. It also provides single-family dwellings, construction, land acquisition and development, consumer lot, multi-family residential, commercial real estate, home equity, business, and consumer loans, as well as commercial and industrial loans. In addition, the company offers insurance brokerage services, such as individual and business insurance policies; holds and markets real estate properties; and debit and credit cards, as well as acts as the trustee. It serves consumers, mid-sized and large businesses, and owners and developers of commercial real estate. The company was formerly known as Washington Federal, Inc. and changed its name to WaFd, Inc in September 2023. WaFd, Inc was founded in 1917 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.