Contrasting Cathay General Bancorp (NASDAQ:CATY) & TFS Financial (NASDAQ:TFSL)

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

Earnings & Valuation

This table compares TFS Financial 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
TFS Financial	$791.96 million	5.69	$90.96 million	$0.36	44.64
Cathay General Bancorp	$1.38 billion	2.85	$315.12 million	$5.12	11.55

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

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for TFS Financial and Cathay General Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TFS Financial	0	3	1	0	2.25
Cathay General Bancorp	1	5	1	0	2.00

TFS Financial currently has a consensus price target of $19.00, suggesting a potential upside of 18.23%. Cathay General Bancorp has a consensus price target of $62.25, suggesting a potential upside of 5.29%. Given TFS Financial’s stronger consensus rating and higher possible upside, analysts clearly believe TFS Financial is more favorable than Cathay General Bancorp.

Insider & Institutional Ownership

9.8% of TFS Financial shares are held by institutional investors. Comparatively, 75.0% of Cathay General Bancorp shares are held by institutional investors. 0.7% of TFS Financial shares are held by company insiders. Comparatively, 4.5% of Cathay General Bancorp shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
TFS Financial	12.36%	5.32%	0.58%
Cathay General Bancorp	24.66%	11.71%	1.43%

Dividends

TFS Financial pays an annual dividend of $1.27 per share and has a dividend yield of 7.9%. Cathay General Bancorp pays an annual dividend of $1.52 per share and has a dividend yield of 2.6%. TFS Financial pays out 352.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Cathay General Bancorp pays out 29.7% of its earnings in the form of a dividend.

Volatility & Risk

TFS Financial has a beta of 0.7, indicating that its stock price is 30% less volatile than the S&P 500. Comparatively, Cathay General Bancorp has a beta of 0.89, indicating that its stock price is 11% less volatile than the S&P 500.

Summary

Cathay General Bancorp beats TFS Financial on 10 of the 15 factors compared between the two stocks.

About TFS Financial

TFS Financial Corporation, through its subsidiaries, provides retail consumer banking services in the United States. Its deposit products include savings, money market, checking, individual retirement, and other qualified plan accounts, as well as certificates of deposit. The company also provides residential real estate mortgage loans, residential construction loans, and home equity loans and lines of credit, as well as purchase mortgages and first mortgage refinance loans. In addition, it offers escrow and settlement services. The company provides its products and services through its main office in Cleveland, Ohio; and multiple full-service branches and loan production offices located throughout the states of Ohio and Florida. TFS Financial Corporation was founded in 1938 and is headquartered in Cleveland, Ohio. TFS Financial Corporation is a subsidiary of Third Federal Savings and Loan Association of Cleveland, MHC.

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.