Head to Head Survey: First Hawaiian (NASDAQ:FHB) and Hanmi Financial (NASDAQ:HAFC)

Hanmi Financial (NASDAQ:HAFC) and First Hawaiian (NASDAQ:FHB) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, earnings, institutional ownership, analyst recommendations, risk, valuation and profitability.

Profitability

This table compares Hanmi Financial and First Hawaiian’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hanmi Financial	17.10%	9.85%	0.97%
First Hawaiian	23.65%	10.19%	1.16%

Dividends

Hanmi Financial pays an annual dividend of $1.12 per share and has a dividend yield of 4.4%. First Hawaiian pays an annual dividend of $1.04 per share and has a dividend yield of 4.3%. Hanmi Financial pays out 44.6% of its earnings in the form of a dividend. First Hawaiian pays out 47.3% 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. Hanmi Financial has raised its dividend for 1 consecutive years. Hanmi Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Hanmi Financial and First Hawaiian, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hanmi Financial	0	3	2	0	2.40
First Hawaiian	3	5	1	0	1.78

Hanmi Financial currently has a consensus price target of $31.33, indicating a potential upside of 22.64%. First Hawaiian has a consensus price target of $27.50, indicating a potential upside of 13.78%. Given Hanmi Financial’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Hanmi Financial is more favorable than First Hawaiian.

Earnings & Valuation

This table compares Hanmi Financial and First Hawaiian”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hanmi Financial	$444.90 million	1.72	$76.09 million	$2.51	10.18
First Hawaiian	$1.17 billion	2.54	$276.27 million	$2.20	10.99

First Hawaiian has higher revenue and earnings than Hanmi Financial. Hanmi Financial is trading at a lower price-to-earnings ratio than First Hawaiian, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

88.7% of Hanmi Financial shares are held by institutional investors. Comparatively, 97.6% of First Hawaiian shares are held by institutional investors. 1.6% of Hanmi Financial shares are held by company insiders. Comparatively, 0.6% of First Hawaiian shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Risk & Volatility

Hanmi Financial has a beta of 0.74, indicating that its share price is 26% less volatile than the S&P 500. Comparatively, First Hawaiian has a beta of 0.71, indicating that its share price is 29% less volatile than the S&P 500.

Summary

Hanmi Financial beats First Hawaiian on 9 of the 17 factors compared between the two stocks.

About Hanmi Financial

Hanmi Financial Corporation operates as the holding company for Hanmi Bank that provides business banking products and services in the United States. It offers various deposit products, including noninterest-bearing checking accounts, savings accounts, negotiable order of withdrawal accounts, money market accounts, and certificates of deposit. The company also provides real estate loans, such as commercial property, construction, and residential property loans; and commercial and industrial loans, such as commercial term loans and commercial lines of credit; and international finance and trade services and products, such as letters of credit, and import and export financing. In addition, it offers small business administration loans for business purposes, which comprise owner-occupied commercial real estate, business acquisitions, start-ups, franchise financing, working capital, improvements and renovations, inventory and equipment, and debt-refinancing, as well as equipment lease financing. The company was founded in 1982 and is headquartered in Los Angeles, California.

About First Hawaiian

First Hawaiian, Inc. operates as a bank holding company for First Hawaiian Bank that provides a range of banking products and services to consumer and commercial customers in the United States. It operates in three segments: Retail Banking, Commercial Banking, and Treasury and Other. The company offers various deposit products, including checking, savings, and time deposit accounts, and other deposit accounts. It also provides residential and commercial mortgage loans, home equity lines of credit and loans, automobile loans and leases, secured and unsecured lines of credit, installment loans, small business loans and leases, and construction lending, as well as commercial lease and auto dealer financing. In addition, the company offers wealth management, personal installment, individual investment and financial planning, insurance protection, trust and estate, private banking, investment management, retirement planning, and merchant processing services, as well as consumer and commercial credit cards. The company was formerly known as BancWest Corporation and changed its name to First Hawaiian, Inc. in April 2016. First Hawaiian, Inc. was founded in 1858 and is headquartered in Honolulu, Hawaii.