Analyzing United Bancorp (NASDAQ:UBCP) and Cathay General Bancorp (NASDAQ:CATY)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Cathay General Bancorp	20.57%	11.30%	1.35%
United Bancorp	18.28%	12.56%	0.96%

Risk and Volatility

Cathay General Bancorp has a beta of 1.1, indicating that its stock price is 10% more volatile than the S&P 500. Comparatively, United Bancorp has a beta of 0.41, indicating that its stock price is 59% less volatile than the S&P 500.

Dividends

Cathay General Bancorp pays an annual dividend of $1.36 per share and has a dividend yield of 2.6%. United Bancorp pays an annual dividend of $0.71 per share and has a dividend yield of 5.5%. Cathay General Bancorp pays out 34.3% of its earnings in the form of a dividend. United Bancorp pays out 51.4% 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. United Bancorp has increased its dividend for 12 consecutive years. United Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Cathay General Bancorp and United Bancorp”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cathay General Bancorp	$1.31 billion	2.81	$354.12 million	$3.97	13.04
United Bancorp	$40.90 million	1.82	$8.95 million	$1.38	9.31

Cathay General Bancorp has higher revenue and earnings than United Bancorp. United 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.

Institutional & Insider Ownership

75.0% of Cathay General Bancorp shares are owned by institutional investors. Comparatively, 15.4% of United Bancorp shares are owned by institutional investors. 4.8% of Cathay General Bancorp shares are owned by insiders. Comparatively, 11.7% of United Bancorp 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 Ratings

This is a summary of current ratings and recommmendations for Cathay General Bancorp and United Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cathay General Bancorp	1	2	1	0	2.00
United Bancorp	0	0	0	0	0.00

Cathay General Bancorp presently has a consensus price target of $44.00, suggesting a potential downside of 15.03%. Given Cathay General Bancorp’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Cathay General Bancorp is more favorable than United Bancorp.

Summary

Cathay General Bancorp beats United Bancorp on 13 of the 17 factors compared between the two stocks.

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.

About United Bancorp

United Bancorp, Inc. operates as the bank holding company for Unified Bank that provides commercial and retail banking services in Ohio. The company provides range of banking and financial services, which includes accepting demand, savings, and time deposits. It also offers commercial, real estate and consumer loans. United Bancorp, Inc. was founded in 1902 and is headquartered in Martins Ferry, Ohio.