Rating Change #2
Cathay General Bancorp
has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, expanding profit margins, solid stock price performance and notable return on equity. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.
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Highlights from the ratings report include:
- CATHAY GENERAL BANCORP has improved earnings per share by 17.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CATHAY GENERAL BANCORP turned its bottom line around by earning $1.07 versus -$0.09 in the prior year. This year, the market expects an improvement in earnings ($1.30 versus $1.07).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Commercial Banks industry average. The net income increased by 16.4% when compared to the same quarter one year prior, going from $26.08 million to $30.36 million.
- The gross profit margin for CATHAY GENERAL BANCORP is currently very high, coming in at 78.50%. It has increased significantly from the same period last year. Along with this, the net profit margin of 24.80% is above that of the industry average.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 29.55% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- Despite the weak revenue results, CATY has outperformed against the industry average of 17.1%. Since the same quarter one year prior, revenues slightly dropped by 6.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
Cathay General Bancorp operates as the holding company for Cathay Bank, which offers various commercial banking products and services for individuals, professionals, and small to medium-sized businesses in the United States. The company has a P/E ratio of 14.1, above the average banking industry P/E ratio of 13.9 and below the S&P 500 P/E ratio of 17.7. Cathay General has a market cap of $1.35 billion and is part of the financial sector and banking industry. Shares are up 13.3% year to date as of the close of trading on Wednesday.
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