Hanmi Financial (NASDAQ:HAFC) and Shore Bancshares (NASDAQ:SHBI) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, analyst recommendations, risk, institutional ownership, valuation, dividends and profitability.
Profitability
This table compares Hanmi Financial and Shore Bancshares' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
Hanmi Financial | 11.41% | 5.56% | 0.53% |
Shore Bancshares | 22.74% | 8.05% | 0.95% |
Dividends
Hanmi Financial pays an annual dividend of $0.40 per share and has a dividend yield of 2.0%. Shore Bancshares pays an annual dividend of $0.48 per share and has a dividend yield of 2.8%. Hanmi Financial pays out 37.7% of its earnings in the form of a dividend. Shore Bancshares pays out 37.5% 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. Hanmi Financial has raised its dividend for 1 consecutive years and Shore Bancshares has raised its dividend for 1 consecutive years. Shore Bancshares is clearly the better dividend stock, given its higher yield and lower payout ratio.
Volatility & Risk
Hanmi Financial has a beta of 1.35, suggesting that its share price is 35% more volatile than the S&P 500. Comparatively, Shore Bancshares has a beta of 0.93, suggesting that its share price is 7% less volatile than the S&P 500.
Institutional and Insider Ownership
88.6% of Hanmi Financial shares are owned by institutional investors. Comparatively, 66.0% of Shore Bancshares shares are owned by institutional investors. 2.9% of Hanmi Financial shares are owned by insiders. Comparatively, 1.8% of Shore Bancshares shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Valuation & Earnings
This table compares Hanmi Financial and Shore Bancshares' revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
Hanmi Financial | $274.32 million | 2.25 | $32.79 million | $1.06 | 18.94 |
Shore Bancshares | $69.79 million | 2.86 | $16.20 million | $1.28 | 13.29 |
Hanmi Financial has higher revenue and earnings than Shore Bancshares. Shore Bancshares is trading at a lower price-to-earnings ratio than Hanmi Financial, indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
This is a breakdown of recent recommendations for Hanmi Financial and Shore Bancshares, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
---|
Hanmi Financial | 0 | 3 | 2 | 0 | 2.40 |
Shore Bancshares | 0 | 0 | 1 | 0 | 3.00 |
Hanmi Financial currently has a consensus target price of $14.00, indicating a potential downside of 30.28%. Shore Bancshares has a consensus target price of $20.00, indicating a potential upside of 17.58%. Given Shore Bancshares' stronger consensus rating and higher probable upside, analysts clearly believe Shore Bancshares is more favorable than Hanmi Financial.
Summary
Shore Bancshares beats Hanmi Financial on 9 of the 16 factors compared between the two stocks.