Ocwen Financial Corporation (OCN) vs. Cathay General Bancorp (CATY) Head-To-Head Survey

Cathay General Bancorp (NASDAQ: CATY) and Ocwen Financial Corporation (NYSE:OCN) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, valuation, institutional ownership, analyst recommendations, earnings, risk and dividends.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Cathay General Bancorp and Ocwen Financial Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cathay General Bancorp 0 3 2 0 2.40
Ocwen Financial Corporation 0 5 0 0 2.00

Cathay General Bancorp currently has a consensus price target of $40.20, indicating a potential upside of 0.27%. Ocwen Financial Corporation has a consensus price target of $3.33, indicating a potential downside of 7.41%. Given Cathay General Bancorp’s stronger consensus rating and higher probable upside, research analysts clearly believe Cathay General Bancorp is more favorable than Ocwen Financial Corporation.

Profitability

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

Net Margins Return on Equity Return on Assets
Cathay General Bancorp 35.30% 10.54% 1.36%
Ocwen Financial Corporation -5.95% -12.41% -1.01%

Institutional and Insider Ownership

67.8% of Cathay General Bancorp shares are held by institutional investors. Comparatively, 48.5% of Ocwen Financial Corporation shares are held by institutional investors. 5.8% of Cathay General Bancorp shares are held by insiders. Comparatively, 5.2% of Ocwen Financial Corporation shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Cathay General Bancorp and Ocwen Financial Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Cathay General Bancorp $475.33 million 6.81 $196.31 million $2.43 16.50
Ocwen Financial Corporation $1.32 billion 0.36 $352.81 million ($0.62) -5.81

Ocwen Financial Corporation has higher revenue and earnings than Cathay General Bancorp. Ocwen Financial Corporation 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.

Volatility and Risk

Cathay General Bancorp has a beta of 1.31, indicating that its stock price is 31% more volatile than the S&P 500. Comparatively, Ocwen Financial Corporation has a beta of 1.27, indicating that its stock price is 27% more volatile than the S&P 500.

Dividends

Cathay General Bancorp pays an annual dividend of $0.84 per share and has a dividend yield of 2.1%. Ocwen Financial Corporation does not pay a dividend. Cathay General Bancorp pays out 34.6% of its earnings in the form of a dividend.

Summary

Cathay General Bancorp beats Ocwen Financial Corporation on 12 of the 15 factors compared between the two stocks.

Cathay General Bancorp Company Profile

Cathay General Bancorp is a bank holding company. The Company holds Cathay Bank, a California state-chartered commercial bank (the Bank); seven limited partnerships investing in affordable housing investments; GBC Venture Capital, Inc., and Asia Realty Corp. The Company also owns the common stock of five statutory business trusts created for issuing capital securities. The Bank primarily services individuals, professionals and small to medium-sized businesses in the local markets and provides commercial mortgage loans, commercial loans, small business administration (SBA) loans, residential mortgage loans, real estate construction loans, home equity lines of credit and installment loans to individuals for automobile, household and other consumer expenditures. The Bank offers passbook accounts, checking accounts, money market deposit accounts, certificates of deposit, individual retirement accounts, college certificates of deposit and public funds deposits.

Ocwen Financial Corporation Company Profile

Ocwen Financial Corporation is a financial services holding company. The Company, through its subsidiaries, originates and services loans. The Company’s segments include Servicing, Lending, and Corporate Items and Other. The Company’s Servicing segment consists of its residential servicing business. The Company’s Lending segment is focused on originating and purchasing conventional and government-insured residential forward and reverse mortgage loans. The Company’s Corporate Items and Other segment includes revenues and expenses of Automotive Capital Services (ACS) and its other business activities. Its servicing clients include some of the financial institutions in the United States, including the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), the Government National Mortgage Association (Ginnie Mae) and non-Agency residential mortgage-backed securities (RMBS) trusts.

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