CapitalSource (NYSE: CSE) and Bank of Hawaii (NYSE:BOH) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their risk, earnings, dividends, analyst recommendations, institutional ownership, valuation and profitability.

Institutional and Insider Ownership

75.7% of Bank of Hawaii shares are owned by institutional investors. 2.2% of Bank of Hawaii shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Bank of Hawaii pays an annual dividend of $2.08 per share and has a dividend yield of 2.4%. CapitalSource does not pay a dividend. Bank of Hawaii pays out 47.8% of its earnings in the form of a dividend.

Profitability

This table compares CapitalSource and Bank of Hawaii’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CapitalSource N/A N/A N/A
Bank of Hawaii 27.27% 15.45% 1.10%

Earnings & Valuation

This table compares CapitalSource and Bank of Hawaii’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
CapitalSource N/A N/A N/A N/A N/A
Bank of Hawaii $655.24 million 5.56 $181.46 million $4.35 19.70

Bank of Hawaii has higher revenue and earnings than CapitalSource.

Analyst Ratings

This is a breakdown of current ratings and price targets for CapitalSource and Bank of Hawaii, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CapitalSource 0 0 0 0 N/A
Bank of Hawaii 1 4 1 0 2.00

Bank of Hawaii has a consensus target price of $89.50, indicating a potential upside of 4.43%.

Summary

Bank of Hawaii beats CapitalSource on 8 of the 9 factors compared between the two stocks.

About CapitalSource

CapitalSource Inc. (CapitalSource) is a commercial lender, which provides financial products to small and middle market businesses nationwide and provides depository products and services to consumers in southern and central California, through its wholly owned subsidiary, CapitalSource Bank. As of December 31, 2012, it had 21 retail bank branches located in southern and central California. During the year ended December 31, 2012, it operated as two reportable segments: CapitalSource Bank and Other Commercial Finance. Its CapitalSource Bank segment comprises its commercial lending and banking business activities, and its Other Commercial Finance segment comprises its loan portfolio and other business activities in the Parent Company. In April 2014, PacWest Bancorp merged with CapitalSource Inc.

About Bank of Hawaii

Bank of Hawaii Corporation is a bank holding company that operates through its subsidiary, Bank of Hawaii (the Bank). The Bank provides a range of financial products and services primarily to customers in Hawaii, Guam and other Pacific Islands. It operates in four segments: Retail Banking, Commercial Banking, Investment Services, and Treasury and Other. The Retail Banking segment offers a range of financial products and services to consumers and small businesses. The Commercial Banking segment offers products, including corporate banking, commercial real estate loans, commercial lease financing, auto dealer financing and deposit products. The Investment Services segment offers private banking and international client banking, trust services, investment management and institutional investment advisory services. The Treasury and Other segment consists of corporate asset and liability management activities, including interest rate risk management and a foreign currency exchange business.

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