Comparing Cathay General Bancorp (NASDAQ:CATY) & Middlefield Banc (NASDAQ:MBCN)

Middlefield Banc (NASDAQ:MBCN – Get Rating) and Cathay General Bancorp (NASDAQ:CATY – Get Rating) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, earnings, analyst recommendations, dividends, valuation, profitability and institutional ownership.

Profitability

This table compares Middlefield Banc and Cathay General Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Middlefield Banc	23.92%	12.32%	1.28%
Cathay General Bancorp	37.58%	15.47%	1.75%

Institutional & Insider Ownership

38.4% of Middlefield Banc shares are owned by institutional investors. Comparatively, 67.2% of Cathay General Bancorp shares are owned by institutional investors. 5.2% of Middlefield Banc shares are owned by company insiders. Comparatively, 4.6% of Cathay General Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Middlefield Banc pays an annual dividend of $0.80 per share and has a dividend yield of 3.5%. Cathay General Bancorp pays an annual dividend of $1.36 per share and has a dividend yield of 4.7%. Middlefield Banc pays out 31.3% of its earnings in the form of a dividend. Cathay General Bancorp pays out 26.3% 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. Middlefield Banc has raised its dividend for 2 consecutive years. Cathay General Bancorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares Middlefield Banc and Cathay General Bancorp’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Middlefield Banc	$62.24 million	2.95	$15.67 million	$2.56	8.87
Cathay General Bancorp	$817.77 million	2.56	$360.64 million	$5.18	5.57

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

Analyst Recommendations

This is a breakdown of current recommendations for Middlefield Banc and Cathay General Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Middlefield Banc	0	1	0	0	2.00
Cathay General Bancorp	0	4	1	0	2.20

Cathay General Bancorp has a consensus price target of $40.17, indicating a potential upside of 39.13%. Given Cathay General Bancorp’s stronger consensus rating and higher probable upside, analysts plainly believe Cathay General Bancorp is more favorable than Middlefield Banc.

Risk and Volatility

Middlefield Banc has a beta of 0.54, suggesting that its share price is 46% less volatile than the S&P 500. Comparatively, Cathay General Bancorp has a beta of 1.14, suggesting that its share price is 14% more volatile than the S&P 500.

Summary

Cathay General Bancorp beats Middlefield Banc on 13 of the 17 factors compared between the two stocks.

About Middlefield Banc

(Get Rating)

Middlefield Banc Corp. is a holding company, which engages in the provision of personal and commercial banking solutions. It offers checking, savings, negotiable order of withdrawal accounts, money market accounts, time certificates of deposit, commercial loans, real estate loans, a variety of consumer loans, safe deposit facilities, and travelers’ checks services. It also provides mortgage and investment services. The company was founded in 1988 and is headquartered in Middlefield, OH.

About Cathay General Bancorp

(Get Rating)

Cathay General Bancorp is a holding company, which engages in the provision of financial services. It offers commercial mortgage loans, commercial loans, small business administration loans, residential mortgage loans, real estate construction loans, home equity lines of credit, and installment loans to individuals for automobile, household, and other consumer expenditures. The company was founded on April 19, 1962 and is headquartered in Los Angeles, CA.