Fifth Third Bancorp (NASDAQ:FITB) and Hanmi Financial (NASDAQ:HAFC) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, dividends, institutional ownership, valuation, risk, analyst recommendations and earnings.
Earnings and Valuation
This table compares Fifth Third Bancorp and Hanmi Financial's revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Fifth Third Bancorp | $9.79 billion | 2.79 | $2.51 billion | $2.77 | 13.88 |
| Hanmi Financial | $274.32 million | 2.25 | $32.79 million | $1.06 | 18.94 |
Fifth Third Bancorp has higher revenue and earnings than Hanmi Financial. Fifth Third Bancorp is trading at a lower price-to-earnings ratio than Hanmi Financial, indicating that it is currently the more affordable of the two stocks.
Dividends
Fifth Third Bancorp pays an annual dividend of $1.08 per share and has a dividend yield of 2.8%. Hanmi Financial pays an annual dividend of $0.40 per share and has a dividend yield of 2.0%. Fifth Third Bancorp pays out 39.0% of its earnings in the form of a dividend. Hanmi Financial pays out 37.7% 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. Fifth Third Bancorp has raised its dividend for 4 consecutive years and Hanmi Financial has raised its dividend for 1 consecutive years. Fifth Third Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Analyst Ratings
This is a breakdown of current recommendations and price targets for Fifth Third Bancorp and Hanmi Financial, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Fifth Third Bancorp | 0 | 5 | 12 | 1 | 2.78 |
| Hanmi Financial | 0 | 3 | 2 | 0 | 2.40 |
Fifth Third Bancorp presently has a consensus target price of $34.4605, indicating a potential downside of 10.35%. Hanmi Financial has a consensus target price of $14.00, indicating a potential downside of 30.28%. Given Fifth Third Bancorp's stronger consensus rating and higher possible upside, analysts clearly believe Fifth Third Bancorp is more favorable than Hanmi Financial.
Profitability
This table compares Fifth Third Bancorp and Hanmi Financial's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Fifth Third Bancorp | 17.50% | 7.52% | 0.80% |
| Hanmi Financial | 11.41% | 5.56% | 0.53% |
Insider & Institutional Ownership
79.2% of Fifth Third Bancorp shares are owned by institutional investors. Comparatively, 88.6% of Hanmi Financial shares are owned by institutional investors. 0.5% of Fifth Third Bancorp shares are owned by company insiders. Comparatively, 2.9% of Hanmi Financial shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Risk and Volatility
Fifth Third Bancorp has a beta of 1.63, indicating that its share price is 63% more volatile than the S&P 500. Comparatively, Hanmi Financial has a beta of 1.35, indicating that its share price is 35% more volatile than the S&P 500.
Summary
Fifth Third Bancorp beats Hanmi Financial on 14 of the 18 factors compared between the two stocks.
