Head to Head Analysis: Western Alliance Bancorporation (NYSE:WAL) and Hope Bancorp (NASDAQ:HOPE)

Hope Bancorp (NASDAQ:HOPE) and Western Alliance Bancorporation (NYSE:WAL) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, analyst recommendations, earnings, institutional ownership, valuation, profitability and risk.

Earnings and Valuation

This table compares Hope Bancorp and Western Alliance Bancorporation”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hope Bancorp	$967.63 million	1.85	$61.59 million	$1.00	14.01
Western Alliance Bancorporation	$5.37 billion	1.64	$969.00 million	$8.88	9.07

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

Profitability

This table compares Hope Bancorp and Western Alliance Bancorporation’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hope Bancorp	12.53%	5.71%	0.70%
Western Alliance Bancorporation	17.20%	13.40%	1.07%

Dividends

Hope Bancorp pays an annual dividend of $0.56 per share and has a dividend yield of 4.0%. Western Alliance Bancorporation pays an annual dividend of $1.68 per share and has a dividend yield of 2.1%. Hope Bancorp pays out 56.0% of its earnings in the form of a dividend. Western Alliance Bancorporation pays out 18.9% 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. Western Alliance Bancorporation has increased its dividend for 5 consecutive years.

Risk & Volatility

Hope Bancorp has a beta of 0.83, suggesting that its stock price is 17% less volatile than the S&P 500. Comparatively, Western Alliance Bancorporation has a beta of 1.34, suggesting that its stock price is 34% more volatile than the S&P 500.

Insider and Institutional Ownership

84.0% of Hope Bancorp shares are held by institutional investors. Comparatively, 79.2% of Western Alliance Bancorporation shares are held by institutional investors. 2.3% of Hope Bancorp shares are held by company insiders. Comparatively, 2.8% of Western Alliance Bancorporation shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Hope Bancorp and Western Alliance Bancorporation, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hope Bancorp	0	3	2	0	2.40
Western Alliance Bancorporation	0	4	11	0	2.73

Hope Bancorp currently has a consensus target price of $15.00, indicating a potential upside of 7.07%. Western Alliance Bancorporation has a consensus target price of $94.82, indicating a potential upside of 17.75%. Given Western Alliance Bancorporation’s stronger consensus rating and higher probable upside, analysts clearly believe Western Alliance Bancorporation is more favorable than Hope Bancorp.

Summary

Western Alliance Bancorporation beats Hope Bancorp on 13 of the 17 factors compared between the two stocks.

About Hope Bancorp

Hope Bancorp, Inc. operates as the bank holding company for Bank of Hope that provides retail and commercial banking services for businesses and individuals in the United States. It accepts personal and business checking, money market, savings, time deposit, and individual retirement accounts. The company also offers loans comprising commercial and industrial loans to businesses for various purposes, such as working capital, purchasing inventory, debt refinancing, business acquisitions, international trade finance, other business-related financing, and loans syndication services; commercial real estate loans; residential mortgage loans; small business administration loans; and consumer loans, such as single-family mortgage, home equity, automobile, credit card, and personal loans. In addition, it provides internet banking and bill-pay, remote deposit capture, lock box, and ACH origination services; treasury management services; foreign currency exchange transactions; interest rate contracts and wealth management services; automated teller machine services; and engages in investment activities. Hope Bancorp, Inc. was founded in 1986 and is headquartered in Los Angeles, California.

About Western Alliance Bancorporation

Western Alliance Bancorporation operates as the bank holding company for Western Alliance Bank that provides various banking products and related services primarily in Arizona, California, and Nevada. It operates through Commercial and Consumer Related segments. The company offers deposit products, including checking, savings, and money market accounts, as well as fixed-rate and fixed maturity certificates of deposit accounts; demand deposits; and treasury management and residential mortgage products and services. It also provides commercial and industrial loan products, such as working capital lines of credit, loans to technology companies, inventory and accounts receivable lines, mortgage warehouse lines, equipment loans and leases, and other commercial loans; commercial real estate loans, which are secured by multi-family residential properties, professional offices, industrial facilities, retail centers, hotels, and other commercial properties; construction and land development loans for single family and multi-family residential projects, industrial/warehouse properties, office buildings, retail centers, medical office facilities, and residential lot developments; and consumer loans. In addition, the company provides other financial services, such as internet banking, wire transfers, electronic bill payment and presentment, funds transfer and other digital payment offerings, lock box services, courier, and cash management services. Further, the company holds certain investment securities, municipal and non-profit loans, and leases; invests primarily in low-income housing tax credits and small business investment corporations; and holds certain real estate loans and related securities. Western Alliance Bancorporation was founded in 1994 and is headquartered in Phoenix, Arizona.