East West Bancorp (NASDAQ:EWBC) versus Sound Financial Bancorp (NASDAQ:SFBC) Critical Contrast

Sound Financial Bancorp (NASDAQ:SFBC) and East West Bancorp (NASDAQ:EWBC) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, institutional ownership, risk, analyst recommendations, valuation, dividends and profitability.

Profitability

This table compares Sound Financial Bancorp and East West Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sound Financial Bancorp	11.64%	6.76%	0.67%
East West Bancorp	28.36%	15.72%	1.68%

Analyst Ratings

This is a summary of current ratings and price targets for Sound Financial Bancorp and East West Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sound Financial Bancorp	0	1	0	0	2.00
East West Bancorp	1	5	10	0	2.56

East West Bancorp has a consensus target price of $128.14, suggesting a potential upside of 10.94%. Given East West Bancorp’s stronger consensus rating and higher possible upside, analysts clearly believe East West Bancorp is more favorable than Sound Financial Bancorp.

Earnings & Valuation

This table compares Sound Financial Bancorp and East West Bancorp”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sound Financial Bancorp	$61.52 million	1.79	$7.16 million	$2.77	15.44
East West Bancorp	$4.67 billion	3.40	$1.33 billion	$9.52	12.13

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

Dividends

Sound Financial Bancorp pays an annual dividend of $0.84 per share and has a dividend yield of 2.0%. East West Bancorp pays an annual dividend of $3.20 per share and has a dividend yield of 2.8%. Sound Financial Bancorp pays out 30.3% of its earnings in the form of a dividend. East West Bancorp pays out 33.6% 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. Sound Financial Bancorp has increased its dividend for 2 consecutive years and East West Bancorp has increased its dividend for 8 consecutive years. East West Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Sound Financial Bancorp has a beta of 0.11, meaning that its stock price is 89% less volatile than the S&P 500. Comparatively, East West Bancorp has a beta of 0.92, meaning that its stock price is 8% less volatile than the S&P 500.

Insider and Institutional Ownership

68.9% of Sound Financial Bancorp shares are owned by institutional investors. Comparatively, 89.5% of East West Bancorp shares are owned by institutional investors. 12.4% of Sound Financial Bancorp shares are owned by company insiders. Comparatively, 1.0% of East West Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

East West Bancorp beats Sound Financial Bancorp on 14 of the 17 factors compared between the two stocks.

About Sound Financial Bancorp

Sound Financial Bancorp, Inc. operates as the bank holding company for Sound Community Bank that provides banking and other financial services for consumers and businesses. It accepts various deposits products comprising savings, money market deposit, NOW, and demand accounts, as well as certificates of deposit. The company also offers loans secured by first and second mortgages on one-to four-family residences; home equity loans, including fixed-rate loans and variable-rate lines of credit; commercial and multifamily real estate loans; construction loans secured by single-family residences, and commercial and multifamily real estate; land loans; commercial business loans to finance commercial vehicles and equipment, as well as loans secured by accounts receivable and/or inventory; and secured and unsecured consumer loans, such as new and used manufactured homes, floating homes, automobiles, boats, and recreational vehicle loans, and loans secured by deposit accounts. The company was founded in 1953 and is headquartered in Seattle, Washington.

About East West Bancorp

East West Bancorp, Inc. operates as the bank holding company for East West Bank that provides a range of personal and commercial banking services to businesses and individuals in the United States. The company operates through three segments: Consumer and Business Banking, Commercial Banking, and Other. It accepts various deposit products, such as personal and business checking and savings accounts, money market, and time deposits. The company’s loan products include mortgage and home equity, commercial and residential real estate, working capital lines of credit, construction finance, trade finance, letters of credit, commercial business, affordable housing loans, asset-based lending, asset-backed finance, project finance, loan syndication, and equipment financing, as well as financing services for clients to facilitate their business transactions between the United States and Asia. It also provides various wealth management, treasury management, foreign exchange, and interest rate and commodity risk hedging services; and mobile and online banking services. The company was founded in 1973 and is headquartered in Pasadena, California.