Bank OZK (NASDAQ:OZK) and East West Bancorp (NASDAQ:EWBC) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, profitability, risk, analyst recommendations, dividends, earnings and institutional ownership.
Institutional and Insider Ownership
85.4% of Bank OZK shares are owned by institutional investors. Comparatively, 88.8% of East West Bancorp shares are owned by institutional investors. 6.7% of Bank OZK shares are owned by insiders. Comparatively, 0.7% of East West Bancorp shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
Valuation and Earnings
This table compares Bank OZK and East West Bancorp's top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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Bank OZK | $1.27 billion | 4.11 | $425.91 million | $3.30 | 12.23 |
East West Bancorp | $2.09 billion | 4.95 | $674.03 million | $4.84 | 15.11 |
East West Bancorp has higher revenue and earnings than Bank OZK. Bank OZK is trading at a lower price-to-earnings ratio than East West Bancorp, indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
This is a breakdown of recent ratings and recommmendations for Bank OZK and East West Bancorp, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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Bank OZK | 0 | 6 | 2 | 0 | 2.25 |
East West Bancorp | 0 | 5 | 3 | 0 | 2.38 |
Bank OZK presently has a consensus target price of $31.4444, indicating a potential downside of 22.11%. East West Bancorp has a consensus target price of $78.5714, indicating a potential upside of 7.47%. Given East West Bancorp's stronger consensus rating and higher possible upside, analysts clearly believe East West Bancorp is more favorable than Bank OZK.
Risk and Volatility
Bank OZK has a beta of 1.9, indicating that its share price is 90% more volatile than the S&P 500. Comparatively, East West Bancorp has a beta of 1.98, indicating that its share price is 98% more volatile than the S&P 500.
Profitability
This table compares Bank OZK and East West Bancorp's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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Bank OZK | 22.78% | 6.58% | 1.07% |
East West Bancorp | 31.05% | 11.80% | 1.24% |
Dividends
Bank OZK pays an annual dividend of $1.11 per share and has a dividend yield of 2.7%. East West Bancorp pays an annual dividend of $1.32 per share and has a dividend yield of 1.8%. Bank OZK pays out 33.6% of its earnings in the form of a dividend. East West Bancorp pays out 27.3% 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. Bank OZK has raised its dividend for 3 consecutive years and East West Bancorp has raised its dividend for 1 consecutive years. Bank OZK is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Summary
East West Bancorp beats Bank OZK on 13 of the 17 factors compared between the two stocks.