Critical Comparison: WaFd (NASDAQ:WAFD) vs. Community West Bancshares (NASDAQ:CWBC)

Community West Bancshares (NASDAQ:CWBC) and WaFd (NASDAQ:WAFD) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, dividends, risk, earnings, analyst recommendations, valuation and institutional ownership.

Institutional & Insider Ownership

33.8% of Community West Bancshares shares are owned by institutional investors. Comparatively, 83.7% of WaFd shares are owned by institutional investors. 9.0% of Community West Bancshares shares are owned by insiders. Comparatively, 1.5% of WaFd shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations for Community West Bancshares and WaFd, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Community West Bancshares	0	2	3	0	2.60
WaFd	0	4	1	0	2.20

Community West Bancshares currently has a consensus price target of $28.17, suggesting a potential upside of 8.13%. WaFd has a consensus price target of $36.25, suggesting a potential upside of 11.92%. Given WaFd’s higher possible upside, analysts clearly believe WaFd is more favorable than Community West Bancshares.

Volatility and Risk

Community West Bancshares has a beta of 0.81, meaning that its stock price is 19% less volatile than the S&P 500. Comparatively, WaFd has a beta of 0.83, meaning that its stock price is 17% less volatile than the S&P 500.

Dividends

Community West Bancshares pays an annual dividend of $0.48 per share and has a dividend yield of 1.8%. WaFd pays an annual dividend of $1.08 per share and has a dividend yield of 3.3%. Community West Bancshares pays out 25.9% of its earnings in the form of a dividend. WaFd pays out 34.1% 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. WaFd has raised its dividend for 2 consecutive years. WaFd is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Community West Bancshares and WaFd’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Community West Bancshares	16.86%	10.12%	1.16%
WaFd	18.47%	8.98%	0.89%

Earnings & Valuation

This table compares Community West Bancshares and WaFd”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Community West Bancshares	$196.20 million	3.60	$38.17 million	$1.85	14.08
WaFd	$1.41 billion	1.70	$226.07 million	$3.17	10.22

WaFd has higher revenue and earnings than Community West Bancshares. WaFd is trading at a lower price-to-earnings ratio than Community West Bancshares, indicating that it is currently the more affordable of the two stocks.

Summary

WaFd beats Community West Bancshares on 9 of the 17 factors compared between the two stocks.

About Community West Bancshares

Community West Bancshares operates as the bank holding company for Community West Bank, N.A. that provides various financial products and services in California. The company offers deposit products, such as checking accounts, savings accounts, money market accounts, and fixed rate and fixed maturity certificates of deposits; and cash management products. It also provides commercial, commercial real estate, consumer, manufactured housing, and small business administration loans, as well as agricultural loans for real estate and operating lines; home equity lines of credit collateralized by residential real estate; single family real estate loans; and installment loans consisting of automobile and general-purpose loans. The company serves small to medium-sized businesses and their owners, professionals, high-net worth individuals, and non-profit organizations. Community West Bancshares was founded in 1989 and is headquartered in Goleta, California.

About WaFd

WaFd, Inc operates as the bank holding company for Washington Federal Bank that provides lending, depository, insurance, and other banking services in the United States. The company offers deposit products, including business and personal checking accounts, and term certificates of deposit, as well as money market accounts and passbook savings accounts. It also provides single-family dwellings, construction, land acquisition and development, consumer lot, multi-family residential, commercial real estate, home equity, business, and consumer loans, as well as commercial and industrial loans. In addition, the company offers insurance brokerage services, such as individual and business insurance policies; holds and markets real estate properties; and debit and credit cards, as well as acts as the trustee. It serves consumers, mid-sized and large businesses, and owners and developers of commercial real estate. The company was formerly known as Washington Federal, Inc. and changed its name to WaFd, Inc in September 2023. WaFd, Inc was founded in 1917 and is headquartered in Seattle, Washington.