Comparing Hope Bancorp (NASDAQ:HOPE) and Five Star Bancorp (NASDAQ:FSBC)

Hope Bancorp (NASDAQ:HOPE) and Five Star Bancorp (NASDAQ:FSBC) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, profitability, risk, analyst recommendations, dividends, earnings and institutional ownership.

Institutional and Insider Ownership

84.0% of Hope Bancorp shares are held by institutional investors. Comparatively, 46.9% of Five Star Bancorp shares are held by institutional investors. 5.2% of Hope Bancorp shares are held by company insiders. Comparatively, 21.7% of Five Star Bancorp shares are held 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.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Hope Bancorp and Five Star Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hope Bancorp	0	2	1	0	2.33
Five Star Bancorp	0	1	4	0	2.80

Hope Bancorp presently has a consensus target price of $13.50, indicating a potential upside of 16.83%. Five Star Bancorp has a consensus target price of $35.00, indicating a potential upside of 15.07%. Given Hope Bancorp’s higher possible upside, research analysts clearly believe Hope Bancorp is more favorable than Five Star Bancorp.

Volatility and Risk

Hope Bancorp has a beta of 0.9, meaning that its stock price is 10% less volatile than the S&P 500. Comparatively, Five Star Bancorp has a beta of 0.51, meaning that its stock price is 49% less volatile than the S&P 500.

Dividends

Hope Bancorp pays an annual dividend of $0.56 per share and has a dividend yield of 4.8%. Five Star Bancorp pays an annual dividend of $0.80 per share and has a dividend yield of 2.6%. Hope Bancorp pays out 71.8% of its earnings in the form of a dividend. Five Star Bancorp pays out 35.1% 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.

Valuation & Earnings

This table compares Hope Bancorp and Five Star Bancorp”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hope Bancorp	$1.00 billion	1.48	$99.63 million	$0.78	14.81
Five Star Bancorp	$131.69 million	4.93	$45.67 million	$2.28	13.34

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

Profitability

This table compares Hope Bancorp and Five Star Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hope Bancorp	9.82%	4.60%	0.57%
Five Star Bancorp	21.64%	12.24%	1.22%

Summary

Five Star Bancorp beats Hope Bancorp on 9 of the 16 factors compared between the two stocks.

About Hope Bancorp

Hope Bancorp, Inc. operates as the bank holding company for Bank of Hope that provides retail and commercial banking services for businesses and individuals in the United States. It accepts personal and business checking, money market, savings, time deposit, and individual retirement accounts. The company also offers loans comprising commercial and industrial loans to businesses for various purposes, such as working capital, purchasing inventory, debt refinancing, business acquisitions, international trade finance, other business-related financing, and loans syndication services; commercial real estate loans; residential mortgage loans; small business administration loans; and consumer loans, such as single-family mortgage, home equity, automobile, credit card, and personal loans. In addition, it provides internet banking and bill-pay, remote deposit capture, lock box, and ACH origination services; treasury management services; foreign currency exchange transactions; interest rate contracts and wealth management services; automated teller machine services; and engages in investment activities. Hope Bancorp, Inc. was founded in 1986 and is headquartered in Los Angeles, California.

About Five Star Bancorp

Five Star Bancorp operates as the bank holding company for Five Star Bank that provides a range of banking products and services to small and medium-sized businesses, professionals, and individuals in Northern California. It accepts various deposits, such as money market accounts, noninterest-bearing and interest checking accounts, savings accounts, term certificate accounts, and time deposits. The company also offers loan products, including commercial and residential real estate loans; commercial loans; commercial land loans; farmland loans; commercial and residential construction loans; and consumer and other loans, as well as operating lines of credit. In addition, it provides debit cards; and remote deposit capture, online and mobile banking, and direct deposit services. Five Star Bancorp was founded in 1999 and is headquartered in Rancho Cordova, California.