Analyzing Central Pacific Financial (NYSE:CPF) & Western Alliance Bancorporation (NYSE:WAL)

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

Insider & Institutional Ownership

79.2% of Western Alliance Bancorporation shares are owned by institutional investors. Comparatively, 88.4% of Central Pacific Financial shares are owned by institutional investors. 2.8% of Western Alliance Bancorporation shares are owned by insiders. Comparatively, 2.7% of Central Pacific Financial 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 current ratings and price targets for Western Alliance Bancorporation and Central Pacific Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Western Alliance Bancorporation	0	2	13	0	2.87
Central Pacific Financial	0	0	1	0	3.00

Western Alliance Bancorporation currently has a consensus price target of $84.27, suggesting a potential upside of 2.64%. Central Pacific Financial has a consensus price target of $24.00, suggesting a potential downside of 13.11%. Given Western Alliance Bancorporation’s higher probable upside, equities analysts plainly believe Western Alliance Bancorporation is more favorable than Central Pacific Financial.

Profitability

This table compares Western Alliance Bancorporation and Central Pacific Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Western Alliance Bancorporation	15.54%	13.98%	1.08%
Central Pacific Financial	16.44%	11.36%	0.75%

Earnings & Valuation

This table compares Western Alliance Bancorporation and Central Pacific Financial’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Western Alliance Bancorporation	$4.32 billion	2.09	$722.40 million	$6.86	11.97
Central Pacific Financial	$244.08 million	3.06	$58.67 million	$2.05	13.47

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

Volatility & Risk

Western Alliance Bancorporation has a beta of 1.45, indicating that its share price is 45% more volatile than the S&P 500. Comparatively, Central Pacific Financial has a beta of 1.13, indicating that its share price is 13% more volatile than the S&P 500.

Dividends

Western Alliance Bancorporation pays an annual dividend of $1.48 per share and has a dividend yield of 1.8%. Central Pacific Financial pays an annual dividend of $1.04 per share and has a dividend yield of 3.8%. Western Alliance Bancorporation pays out 21.6% of its earnings in the form of a dividend. Central Pacific Financial pays out 50.7% 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.

Summary

Western Alliance Bancorporation beats Central Pacific Financial on 10 of the 16 factors compared between the two stocks.

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.

About Central Pacific Financial

Central Pacific Financial Corp. operates as the bank holding company for Central Pacific Bank that provides a range of commercial banking products and services to businesses, professionals, and individuals in the United States. It offers various deposit products and services, including checking, savings and time deposits, cash management and digital banking, trust, and retail brokerage services, as well as money market accounts and certificates of deposit. The company also provides various lending activities, such as commercial, commercial and residential mortgage, home equity, and consumer loans; and other products and services comprising debit cards, internet and mobile banking, cash management services, full-service ATMs, safe deposit boxes, international banking services, night depository facilities, foreign exchange, and wire transfers. In addition, it offers wealth management products and services that include non-deposit investment products, annuities, insurance, investment management, asset custody and general consultation, and planning services. The company was founded in 1954 and is headquartered in Honolulu, Hawaii.