Comparing MB Financial (MBFI) & Central Pacific Financial (CPF)

MB Financial (NASDAQ: MBFI) and Central Pacific Financial (NYSE:CPF) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, institutional ownership, earnings, risk, dividends and valuation.

Dividends

MB Financial pays an annual dividend of $0.84 per share and has a dividend yield of 1.8%. Central Pacific Financial pays an annual dividend of $0.72 per share and has a dividend yield of 2.3%. MB Financial pays out 35.9% of its earnings in the form of a dividend. Central Pacific Financial pays out 45.3% 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. Central Pacific Financial has increased its dividend for 2 consecutive years. Central Pacific Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares MB Financial and Central Pacific Financial’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
MB Financial $932.08 million 4.23 $174.13 million $2.34 20.07
Central Pacific Financial $209.46 million 4.46 $46.99 million $1.59 19.51

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

Volatility & Risk

MB Financial has a beta of 1.2, suggesting that its share price is 20% more volatile than the S&P 500. Comparatively, Central Pacific Financial has a beta of 1.19, suggesting that its share price is 19% more volatile than the S&P 500.

Insider and Institutional Ownership

76.5% of MB Financial shares are owned by institutional investors. Comparatively, 92.1% of Central Pacific Financial shares are owned by institutional investors. 7.1% of MB Financial shares are owned by company insiders. Comparatively, 4.1% of Central Pacific Financial shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for MB Financial and Central Pacific Financial, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MB Financial 0 5 2 0 2.29
Central Pacific Financial 0 1 1 0 2.50

MB Financial currently has a consensus target price of $49.00, indicating a potential upside of 4.34%. Central Pacific Financial has a consensus target price of $32.50, indicating a potential upside of 4.77%. Given Central Pacific Financial’s stronger consensus rating and higher probable upside, analysts clearly believe Central Pacific Financial is more favorable than MB Financial.

Profitability

This table compares MB Financial and Central Pacific Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MB Financial 20.21% 8.40% 1.08%
Central Pacific Financial 22.45% 9.64% 0.90%

Summary

Central Pacific Financial beats MB Financial on 9 of the 17 factors compared between the two stocks.

MB Financial Company Profile

MB Financial, Inc. (MB Financial) is a financial holding company. The Company’s segments include banking, leasing and mortgage banking. As of December 31, 2016, the Company’s primary market was the Chicago metropolitan area, in which the Company operated 95 banking offices through its bank subsidiary, MB Financial Bank, N.A. (MB Financial Bank). Through MB Financial Bank, the Company offers a range of financial services to small and middle market businesses, and individuals in the markets that the Company serves. MB Financial Bank’s subsidiaries include LaSalle Systems Leasing, Inc. (LaSalle), Celtic Leasing Corp. (Celtic) and MB Equipment Finance, LLC, (MB Equipment Finance). MB Financial Bank also has a majority owned subsidiary with operating activities, Cedar Hill Associates, LLC (Cedar Hill). The Company operates four primary lines of business within its banking segment: commercial banking, lease banking, retail banking and wealth management.

Central Pacific Financial Company Profile

Central Pacific Financial Corp. is the bank holding company of Central Pacific Bank (the Bank). The Company’s segments include Banking Operations, Treasury and All Others. The Banking Operations segment includes construction and real estate development lending, commercial lending, residential mortgage lending, consumer lending, trust services, retail brokerage services and its retail branch offices, which provide a range of deposit and loan products, as well as various other banking services. The Treasury segment is responsible for managing the Company’s investment securities portfolio and wholesale funding activities. The All Others segment includes activities, such as electronic banking, data processing and management of Bank-owned properties. The Company also offers wealth management products and services, such as non-deposit investment products, annuities, insurance, investment management, asset custody, and general consultation and planning services.

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