Analyzing Oak Valley Bancorp (NASDAQ:OVLY) and Cathay General Bancorp (NASDAQ:CATY)

Oak Valley Bancorp (NASDAQ:OVLY) and Cathay General Bancorp (NASDAQ:CATY) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, earnings, institutional ownership, profitability, valuation, dividends and risk.

Volatility & Risk

Oak Valley Bancorp has a beta of 0.21, meaning that its share price is 79% less volatile than the S&P 500. Comparatively, Cathay General Bancorp has a beta of 0.87, meaning that its share price is 13% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Oak Valley Bancorp	24.80%	11.99%	1.20%
Cathay General Bancorp	23.79%	11.37%	1.38%

Institutional and Insider Ownership

30.9% of Oak Valley Bancorp shares are held by institutional investors. Comparatively, 75.0% of Cathay General Bancorp shares are held by institutional investors. 13.9% of Oak Valley Bancorp shares are held by insiders. Comparatively, 4.5% of Cathay General Bancorp shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Oak Valley Bancorp pays an annual dividend of $0.75 per share and has a dividend yield of 2.3%. Cathay General Bancorp pays an annual dividend of $1.52 per share and has a dividend yield of 2.7%. Oak Valley Bancorp pays out 26.0% of its earnings in the form of a dividend. Cathay General Bancorp pays out 31.3% 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. Oak Valley Bancorp has increased its dividend for 11 consecutive years.

Earnings and Valuation

This table compares Oak Valley Bancorp and Cathay General Bancorp”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Oak Valley Bancorp	$95.04 million	2.93	$23.91 million	$2.88	11.50
Cathay General Bancorp	$1.38 billion	2.71	$315.12 million	$4.85	11.55

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

Analyst Ratings

This is a summary of current ratings and target prices for Oak Valley Bancorp and Cathay General Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Oak Valley Bancorp	0	0	1	0	3.00
Cathay General Bancorp	1	3	2	0	2.17

Cathay General Bancorp has a consensus price target of $52.00, suggesting a potential downside of 7.18%. Given Cathay General Bancorp’s higher possible upside, analysts plainly believe Cathay General Bancorp is more favorable than Oak Valley Bancorp.

Summary

Cathay General Bancorp beats Oak Valley Bancorp on 10 of the 17 factors compared between the two stocks.

About Oak Valley Bancorp

Oak Valley Bancorp operates as the bank holding company for Oak Valley Community Bank that provides a range of commercial banking services to individuals and small to medium-sized businesses in the Central Valley and the Eastern Sierras. The company's deposits products include checking and savings, money market, health savings, and individual retirement accounts, as well as certificates of deposit. It also offers commercial real estate loans, commercial business lending and trade finance, and small business administration lending, as well as consumer loans, including automobile loans, home mortgages, credit lines, and other personal loans. In addition, the company provides online and mobile banking, remote deposit capture, merchant, night depository, extended hours, wire transfer of funds, note collection services, and automated teller machines. The company was incorporated in 1990 and is headquartered in Oakdale, California.

About Cathay General Bancorp

Cathay General Bancorp operates as the holding company for Cathay Bank that offers various commercial banking products and services to individuals, professionals, and small to medium-sized businesses in the United States. The company offers various deposit products, including passbook accounts, checking accounts, money market deposit accounts, certificates of deposit, individual retirement accounts, and public funds deposits. It also provides loan products, such as commercial mortgage loans, commercial loans, small business administration loans, residential mortgage loans, real estate construction loans, and home equity lines of credit, as well as installment loans to individuals for household, and other consumer expenditures. In addition, the company offers trade financing, letter of credit, wire transfer, forward currency spot and forward contract, safe deposit, collection, automatic teller machine, Internet banking, investment, and other customary bank services, as well as securities and insurance products. Cathay General Bancorp was founded in 1962 and is headquartered in Los Angeles, California.