Capstar Financial (NASDAQ:CSTR) and First Hawaiian (NASDAQ:FHB) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, analyst recommendations, dividends, risk, valuation, profitability and institutional ownership.

Profitability

This table compares Capstar Financial and First Hawaiian’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Capstar Financial 16.57% 10.20% 1.10%
First Hawaiian 25.59% 10.13% 1.25%

Volatility and Risk

Capstar Financial has a beta of 0.52, meaning that its share price is 48% less volatile than the S&P 500. Comparatively, First Hawaiian has a beta of 0.5, meaning that its share price is 50% less volatile than the S&P 500.

Insider and Institutional Ownership

36.0% of Capstar Financial shares are held by institutional investors. Comparatively, 50.7% of First Hawaiian shares are held by institutional investors. 18.3% of Capstar Financial shares are held by company insiders. Comparatively, 0.1% of First Hawaiian shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Capstar Financial and First Hawaiian’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Capstar Financial $62.42 million 2.96 $1.50 million $0.40 39.00
First Hawaiian $776.37 million 4.44 $183.68 million $1.65 15.47

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

Analyst Ratings

This is a summary of current ratings and recommmendations for Capstar Financial and First Hawaiian, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Capstar Financial 0 1 1 0 2.50
First Hawaiian 1 4 4 0 2.33

Capstar Financial presently has a consensus price target of $19.50, indicating a potential upside of 25.00%. First Hawaiian has a consensus price target of $32.25, indicating a potential upside of 26.32%. Given First Hawaiian’s higher possible upside, analysts plainly believe First Hawaiian is more favorable than Capstar Financial.

Dividends

Capstar Financial pays an annual dividend of $0.16 per share and has a dividend yield of 1.0%. First Hawaiian pays an annual dividend of $0.96 per share and has a dividend yield of 3.8%. Capstar Financial pays out 40.0% of its earnings in the form of a dividend. First Hawaiian pays out 58.2% 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

First Hawaiian beats Capstar Financial on 10 of the 16 factors compared between the two stocks.

Capstar Financial Company Profile

CapStar Financial Holdings, Inc. operates as the holding company for CapStar Bank that provides commercial banking services to consumer and corporate customers located primarily in Davidson, Sumner, Williamson, and the surrounding counties in Tennessee, the United States. It offers a range of deposit products and services, including demand deposits, interest-bearing transaction accounts, money market accounts, time and savings deposits, certificates of deposit, and CDARS reciprocal products. The company also provides commercial and consumer real estate, construction and land development, commercial and industrial, consumer, and other loans. In addition, it offers private banking and wealth management services for the owners and operators of business clients and other high net worth individuals; and correspondent banking services to community banks. Further, the company provides telephone and online banking, direct deposit, mobile banking, remote deposit, and cash management services, as well as safe deposit boxes for individuals, and small and medium sized businesses. CapStar Financial Holdings, Inc. was founded in 2007 and is headquartered in Nashville, Tennessee.

First Hawaiian Company Profile

First Hawaiian, Inc. operates as a bank holding company for First Hawaiian Bank that provides a range of banking services to consumer and commercial customers in the United States. It operates through Retail Banking and Commercial Banking segments. The company accepts various deposit products, such as checking and savings accounts, and time deposit accounts. Its lending activities include residential and commercial mortgage and real estate loans, home equity lines of credit, automobile loans and leases, personal lines of credit, installment loans, small business loans and leases, commercial lease financing, and auto dealer financing. The company also offers credit cards; and individual investment and financial planning, insurance protection, trust and estate, private banking, investment management, merchant processing, and retirement planning services. As of December 31, 2017, it operated 62 branches Oahu, Maui, Hawaii, Kauai, Guam, and Saipan. First Hawaiian, Inc. was formerly known as BancWest Corporation and changed its name to First Hawaiian, Inc. in April 2016. The company was founded in 1858 and is headquartered in Honolulu, Hawaii. First Hawaiian, Inc. is a subsidiary of BancWest Corporation.

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