Reviewing HomeStreet (NASDAQ:HMST) and Cambridge Bancorp (NASDAQ:CATC)

HomeStreet (NASDAQ:HMSTGet Rating) and Cambridge Bancorp (NASDAQ:CATCGet Rating) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their profitability, dividends, analyst recommendations, earnings, risk, valuation and institutional ownership.

Dividends

HomeStreet pays an annual dividend of $1.40 per share and has a dividend yield of 3.6%. Cambridge Bancorp pays an annual dividend of $2.56 per share and has a dividend yield of 3.3%. HomeStreet pays out 27.3% of its earnings in the form of a dividend. Cambridge Bancorp pays out 33.5% 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. HomeStreet has raised its dividend for 2 consecutive years and Cambridge Bancorp has raised its dividend for 25 consecutive years. HomeStreet is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of recent recommendations for HomeStreet and Cambridge Bancorp, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
HomeStreet 1 0 2 0 2.33
Cambridge Bancorp 0 0 3 0 3.00

HomeStreet currently has a consensus price target of $52.67, suggesting a potential upside of 35.91%. Cambridge Bancorp has a consensus price target of $96.75, suggesting a potential upside of 23.20%. Given HomeStreet’s higher probable upside, equities research analysts plainly believe HomeStreet is more favorable than Cambridge Bancorp.

Volatility & Risk

HomeStreet has a beta of 1.03, indicating that its stock price is 3% more volatile than the S&P 500. Comparatively, Cambridge Bancorp has a beta of 0.52, indicating that its stock price is 48% less volatile than the S&P 500.

Insider and Institutional Ownership

92.9% of HomeStreet shares are held by institutional investors. Comparatively, 52.8% of Cambridge Bancorp shares are held by institutional investors. 3.8% of HomeStreet shares are held by insiders. Comparatively, 3.2% of Cambridge Bancorp shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares HomeStreet and Cambridge Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
HomeStreet 31.04% 15.46% 1.45%
Cambridge Bancorp 30.01% 12.67% 1.17%

Earnings & Valuation

This table compares HomeStreet and Cambridge Bancorp’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
HomeStreet $364.27 million 1.99 $115.42 million $5.12 7.57
Cambridge Bancorp $177.84 million 3.09 $54.02 million $7.64 10.28

HomeStreet has higher revenue and earnings than Cambridge Bancorp. HomeStreet is trading at a lower price-to-earnings ratio than Cambridge Bancorp, indicating that it is currently the more affordable of the two stocks.

Summary

HomeStreet beats Cambridge Bancorp on 11 of the 17 factors compared between the two stocks.

About HomeStreet (Get Rating)

HomeStreet, Inc. operates as the bank holding company for HomeStreet Bank that provides commercial, mortgage, and consumer/retail banking services primarily in the Western United States. The company offers personal and business checking, savings accounts, interest-bearing negotiable order of withdrawal accounts, money market accounts, and time certificates of deposit; credit cards; insurance; and treasury management products and services. Its loan products include commercial business and agriculture loans, single family residential mortgages, consumer loans, commercial loans secured by residential and commercial real estate, and construction loans for residential and commercial real estate development, as well as consumer installment loans and permanent loans on commercial real estate and single-family residences. In addition, the company offers its products and services through bank branches, loan production offices, and ATMs, as well as through online, mobile, and telephone banking. As of December 31, 2021, it operated 60 full-service bank branches located in Washington state, Northern and Southern California, the Portland, Oregon, and Hawaii; and five primary stand-alone commercial lending centers in Central Washington, Oregon, Southern California, Idaho, and Utah. HomeStreet, Inc. serves small and medium sized businesses, real estate investors, professional firms, and individuals. The company was formerly known as Continental Mortgage and Loan Company. HomeStreet, Inc. was incorporated in 1921 and is headquartered in Seattle, Washington.

About Cambridge Bancorp (Get Rating)

Cambridge Bancorp operates as the bank holding company for Cambridge Trust Company that provides commercial and consumer banking, and investment management and trust services. The company accepts various deposits, such as checking, savings, money market, trust, and individual retirement accounts; and time and demand deposits, and certificates of deposit. Its loan products include residential and commercial real estate loans; home equity lines of credit and term loans; commercial and industrial loans; secured and unsecured loans, lines of credit, and personal installment loans; and construction loans. The company also offers cash management, online and mobile banking, and payments services. It serves commercial enterprises, non-profit organizations, and individuals. The company operates through a network of 19 banking offices in Eastern Massachusetts and New Hampshire; and two wealth management offices located in Massachusetts, as well as three wealth management offices located in New Hampshire. Cambridge Bancorp was founded in 1890 and is headquartered in Cambridge, Massachusetts.

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