CVB Financial (NASDAQ:CVBF – Get Free Report) and Preferred Bank (NASDAQ:PFBC – Get Free Report) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, analyst recommendations, institutional ownership, dividends, profitability, earnings and risk.
Profitability
This table compares CVB Financial and Preferred Bank’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| CVB Financial | 31.95% | 9.18% | 1.33% |
| Preferred Bank | 25.67% | 16.91% | 1.82% |
Analyst Recommendations
This is a summary of current ratings and recommmendations for CVB Financial and Preferred Bank, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| CVB Financial | 0 | 3 | 2 | 0 | 2.40 |
| Preferred Bank | 0 | 2 | 2 | 1 | 2.80 |
Insider and Institutional Ownership
74.2% of CVB Financial shares are owned by institutional investors. Comparatively, 72.8% of Preferred Bank shares are owned by institutional investors. 6.1% of CVB Financial shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Dividends
CVB Financial pays an annual dividend of $0.80 per share and has a dividend yield of 4.1%. Preferred Bank pays an annual dividend of $3.00 per share and has a dividend yield of 3.0%. CVB Financial pays out 54.8% of its earnings in the form of a dividend. Preferred Bank pays out 30.5% 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. Preferred Bank has increased its dividend for 5 consecutive years.
Earnings and Valuation
This table compares CVB Financial and Preferred Bank”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| CVB Financial | $684.59 million | 3.90 | $200.72 million | $1.46 | 13.38 |
| Preferred Bank | $282.84 million | 5.12 | $130.66 million | $9.84 | 10.20 |
CVB Financial has higher revenue and earnings than Preferred Bank. Preferred Bank is trading at a lower price-to-earnings ratio than CVB Financial, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
CVB Financial has a beta of 0.68, indicating that its share price is 32% less volatile than the S&P 500. Comparatively, Preferred Bank has a beta of 0.74, indicating that its share price is 26% less volatile than the S&P 500.
Summary
Preferred Bank beats CVB Financial on 9 of the 17 factors compared between the two stocks.
About CVB Financial
CVB Financial Corp. operates as a bank holding company for Citizens Business Bank, a state-chartered bank that provides banking and financial services to small to mid-sized businesses and individuals. It offers checking, savings, money market, and time certificates of deposit products for business and personal accounts; and serves as a federal tax depository for business customers. The company also provides commercial lending products comprising lines of credit and other working capital financing, accounts receivable lending, and letters of credit; agriculture loans to finance the operating needs of wholesale dairy farm operations, cattle feeders, livestock raisers, and farmers; lease financing services for municipal governments; commercial real estate and construction loans; and consumer financing products, including automobile leasing and financing, lines of credit, credit cards, home mortgages, and home equity loans and lines of credit. In addition, it offers various specialized services, such as treasury management systems for monitoring cash flow, merchant card processing program, armored pick-up and delivery, payroll services, remote deposit capture, electronic funds transfers, wires and automated clearinghouse, and online account access. Further, the company provides trust services, such as fiduciary services, mutual funds, annuities, 401(k) plans, and individual investment accounts. CVB Financial Corp. was founded in 1974 and is headquartered in Ontario, California.
About Preferred Bank
Preferred Bank provides various commercial banking products and services to small and mid-sized businesses and their owners, entrepreneurs, real estate developers and investors, professionals, and high net worth individuals. The company accepts checking, savings, and money market deposit accounts; fixed-rate and fixed maturity retail, and non-retail certificates of deposit; and individual retirement accounts. It also provides real estate mortgage loans that are secured by retail, industrial, office, special purpose, and residential single and multi-family properties; real estate construction loans; commercial loans comprising lines of credit for working capital, term loans for capital expenditures, and commercial and stand-by letters of credit; and small business administration loans. In addition, the company offers trade finance services, including commercial and export letters of credit, import lines of credit, documentary collections, international wire transfers, acceptances/trust receipt financing products, export financing, and bills purchase programs. Further, it provides cash management services; and internet, mobile, and tablet banking services. The company operates through full-service branch offices in the California counties of Los Angeles, Orange and San Francisco; Flushing, New York; Houston suburb of Sugar Land, Texas; and a satellite office in Manhattan, New York. The company was incorporated in 1991 and is headquartered in Los Angeles, California.
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