Guaranty Bancshares (NASDAQ: HAFC) and Hanmi Financial (NASDAQ:HAFC) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, risk, analyst recommendations, earnings, dividends and profitability.

Profitability

This table compares Guaranty Bancshares and Hanmi Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Guaranty Bancshares 17.33% 8.45% 0.90%
Hanmi Financial 22.68% 10.76% 1.15%

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Guaranty Bancshares and Hanmi Financial, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Guaranty Bancshares 0 2 0 0 2.00
Hanmi Financial 0 2 2 0 2.50

Guaranty Bancshares presently has a consensus target price of $34.50, indicating a potential upside of 4.77%. Hanmi Financial has a consensus target price of $30.00, indicating a potential upside of 15.16%. Given Hanmi Financial’s stronger consensus rating and higher possible upside, analysts plainly believe Hanmi Financial is more favorable than Guaranty Bancshares.

Risk & Volatility

Guaranty Bancshares has a beta of -0.05, suggesting that its share price is 105% less volatile than the S&P 500. Comparatively, Hanmi Financial has a beta of 0.77, suggesting that its share price is 23% less volatile than the S&P 500.

Institutional and Insider Ownership

21.0% of Guaranty Bancshares shares are owned by institutional investors. Comparatively, 88.5% of Hanmi Financial shares are owned by institutional investors. 22.6% of Guaranty Bancshares shares are owned by company insiders. Comparatively, 3.9% of Hanmi Financial shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

Guaranty Bancshares pays an annual dividend of $0.56 per share and has a dividend yield of 1.7%. Hanmi Financial pays an annual dividend of $0.96 per share and has a dividend yield of 3.7%. Guaranty Bancshares pays out 35.9% of its earnings in the form of a dividend. Hanmi Financial pays out 53.0% 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. Hanmi Financial has increased its dividend for 4 consecutive years. Hanmi Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Guaranty Bancshares and Hanmi Financial’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Guaranty Bancshares $86.06 million 4.58 $14.43 million $1.56 21.11
Hanmi Financial $242.74 million 3.49 $54.66 million $1.81 14.39

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

Summary

Hanmi Financial beats Guaranty Bancshares on 13 of the 17 factors compared between the two stocks.

About Guaranty Bancshares

Guaranty Bancshares, Inc. operates as the bank holding company for Guaranty Bank & Trust, N.A. that provides a range of commercial and consumer banking products and services for small- and medium-sized businesses, professionals, and individuals. It offers various deposit products, such as checking and savings, money market, and business accounts, as well as certificates of deposit; and loan products comprising commercial and industrial, construction and development, commercial real estate, farmland, consumer, one-to-four family residential, multi-family residential, and agricultural loans. The company also provides trust, wealth management, and retirement plan services; and remote deposit capture, online and mobile banking, bank-by-mail, direct deposit, cash and treasury management, ATM, and night depository services, as well as debit cards, e-statements, cashier's checks, and letters of credit. As of March 15, 2018, it had 28 banking locations across 20 Texas communities located within the East Texas, Dallas/Fort Worth metroplex, and Central Texas regions. The company was founded in 1913 and is headquartered in Mount Pleasant, Texas.

About Hanmi Financial

Hanmi Financial Corporation operates as the holding company for Hanmi Bank that provides business banking products and services in the United States. The company offers various deposit products, including noninterest-bearing checking accounts, interest-bearing checking and savings accounts, negotiable order of withdrawal accounts, money market accounts, and certificates of deposit. It also provides real estate loans, including commercial property, construction, and residential property loans; and commercial and industrial loans, such as commercial term loans and commercial lines of credit, as well as international finance, and trade services and products comprising letters of credit, and import and export financing. In addition, the company offers consumer loans that include automobile loans, secured and unsecured personal loans, home improvement loans, home equity lines of credit, unsecured lines of credit, and credit cards; and small business administration loans for business purposes, which comprise owner-occupied commercial real estate, business acquisitions, start-ups, franchise financing, working capital, improvements and renovations, inventory and equipment, and debt-refinancing, as well as equipment lease financing. As of January 25, 2018, it operated a network of 40 full-service branches and 8 loan production offices in California, Texas, Illinois, Virginia, New Jersey, New York, Colorado, Washington, and Georgia. The company was founded in 2000 and is headquartered in Los Angeles, California.

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