Analyzing Cathay General Bancorp (NASDAQ:CATY) and Malaga Financial (OTCMKTS:MLGF)

Cathay General Bancorp (NASDAQ:CATY) and Malaga Financial (OTCMKTS:MLGF) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their earnings, institutional ownership, risk, dividends, valuation, profitability and analyst recommendations.

Dividends

Cathay General Bancorp pays an annual dividend of $1.52 per share and has a dividend yield of 2.9%. Malaga Financial pays an annual dividend of $1.00 per share and has a dividend yield of 4.7%. Cathay General Bancorp pays out 33.5% of its earnings in the form of a dividend. Malaga Financial pays out 45.9% 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.

Earnings and Valuation

This table compares Cathay General Bancorp and Malaga Financial”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cathay General Bancorp	$817.89 million	4.33	$315.12 million	$4.54	11.66
Malaga Financial	N/A	N/A	$21.55 million	$2.18	9.82

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

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Cathay General Bancorp and Malaga Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cathay General Bancorp	0	3	2	0	2.40
Malaga Financial	0	0	0	0	0.00

Cathay General Bancorp presently has a consensus target price of $52.50, indicating a potential downside of 0.83%. Given Cathay General Bancorp’s stronger consensus rating and higher probable upside, equities analysts plainly believe Cathay General Bancorp is more favorable than Malaga Financial.

Profitability

This table compares Cathay General Bancorp and Malaga Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cathay General Bancorp	22.76%	10.89%	1.32%
Malaga Financial	N/A	N/A	N/A

Insider and Institutional Ownership

75.0% of Cathay General Bancorp shares are held by institutional investors. Comparatively, 1.2% of Malaga Financial shares are held by institutional investors. 4.9% of Cathay General Bancorp shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Volatility & Risk

Cathay General Bancorp has a beta of 0.82, meaning that its stock price is 18% less volatile than the S&P 500. Comparatively, Malaga Financial has a beta of 0.1, meaning that its stock price is 90% less volatile than the S&P 500.

Summary

Cathay General Bancorp beats Malaga Financial on 14 of the 15 factors compared between the two stocks.

About Cathay General Bancorp

Cathay General Bancorp operates as the holding company for Cathay Bank that offers various commercial banking products and services to individuals, professionals, and small to medium-sized businesses in the United States. The company offers various deposit products, including passbook accounts, checking accounts, money market deposit accounts, certificates of deposit, individual retirement accounts, and public funds deposits. It also provides loan products, such as commercial mortgage loans, commercial loans, small business administration loans, residential mortgage loans, real estate construction loans, and home equity lines of credit, as well as installment loans to individuals for household, and other consumer expenditures. In addition, the company offers trade financing, letter of credit, wire transfer, forward currency spot and forward contract, safe deposit, collection, automatic teller machine, Internet banking, investment, and other customary bank services, as well as securities and insurance products. Cathay General Bancorp was founded in 1962 and is headquartered in Los Angeles, California.

About Malaga Financial

Malaga Financial Corporation operates as the holding company for Malaga Bank that provides various community banking products and services to personal and business customers. It offers checking, savings, NOW, and money market accounts, certificates of deposits, business banking, consumer, and demand deposits. The company also provides commercial real estate, single and multi-family residential mortgage, consumer, 14-unit investment property, construction, personal, and business loans; home equity lines of credit; and certificates of deposit. In addition, it offers coupon redemption, direct deposit, overdraft lines of credit, telephone transfers, U.S. savings bond redemption, and wire transfer services; and ATM and VISA debit cards, bank by mail, medallion signature guarantee, night depository, notary, safe deposit boxes, and trust deed note collection services. Further, the company provides online banking services, including bill payer, e-statements, and mobile banking services. The company was incorporated in 2002 and is headquartered in Palos Verdes Estates, California.