East West Bancorp (NASDAQ: EWBC) and Monarch Financial (NASDAQ:MNRK) are both financials companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, valuation, analyst recommendations, earnings, profitability, institutional ownership and dividends.

Insider and Institutional Ownership

90.9% of East West Bancorp shares are owned by institutional investors. 0.9% of East West Bancorp 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.

Volatility & Risk

East West Bancorp has a beta of 1.45, meaning that its share price is 45% more volatile than the S&P 500. Comparatively, Monarch Financial has a beta of 0.63, meaning that its share price is 37% less volatile than the S&P 500.

Profitability

This table compares East West Bancorp and Monarch Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
East West Bancorp 31.93% 13.56% 1.39%
Monarch Financial 12.93% 13.64% 1.39%

Valuation & Earnings

This table compares East West Bancorp and Monarch Financial’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
East West Bancorp $1.58 billion 5.91 $505.62 million $3.47 18.66
Monarch Financial N/A N/A N/A $1.26 14.67

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

Analyst Recommendations

This is a summary of recent ratings and price targets for East West Bancorp and Monarch Financial, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
East West Bancorp 1 5 7 0 2.46
Monarch Financial 0 0 0 0 N/A

East West Bancorp presently has a consensus price target of $69.45, indicating a potential upside of 7.27%. Given East West Bancorp’s higher possible upside, equities research analysts clearly believe East West Bancorp is more favorable than Monarch Financial.

Dividends

East West Bancorp pays an annual dividend of $0.80 per share and has a dividend yield of 1.2%. Monarch Financial pays an annual dividend of $0.36 per share and has a dividend yield of 1.9%. East West Bancorp pays out 23.1% of its earnings in the form of a dividend. Monarch Financial pays out 28.6% 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.

Summary

East West Bancorp beats Monarch Financial on 10 of the 12 factors compared between the two stocks.

East West Bancorp Company Profile

East West Bancorp, Inc. is a bank holding company. The Company’s principal business is to serve as a holding company for East West Bank (the Bank) and other banking or banking-related subsidiaries. The Bank is a California state-chartered bank, which operates in the United States and Greater China. The Bank provides a range of personal and commercial banking services to businesses, business executives, professionals, and other individuals. It operates through three segments: Retail Banking, Commercial Banking and Other. The Retail Banking segment focuses primarily on retail operations through the Bank’s branch network. The Commercial Banking segment primarily generates commercial and industrial (C&I) loans and commercial real estate (CRE) loans through the domestic commercial lending operations in California, New York, Texas, Washington, Massachusetts, Nevada and Georgia, and through the foreign commercial lending operations in China and Hong Kong.

Monarch Financial Company Profile

Monarch Financial Holdings, Inc. (Monarch) is a Virginia-chartered bank holding company. The Company is engaged in commercial and retail banking; investment and insurance sales, and mortgage origination and brokerage. The Company conducts its operations through its subsidiary, Monarch Bank (the Bank), and its two subsidiaries, Monarch Investment, LLC and Monarch Capital, LLC. The Company operates through two segments: community banking (banking) and retail mortgage banking services (mortgage banking). The Company’s community banking segment involves making loans to and generating deposits from individuals and businesses. Monarch’s mortgage banking services consist of originating residential loans and subsequently selling them to investors. Monarch also does business in various markets, such as OBX Bank, Monarch Bank Private Wealth, Monarch Mortgage and under various names through joint ventures with other partners.

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