East West Bancorp Inc (EWBC) stock analysis

P/E above its 5-year median

East West Bancorp's P/E of 12.4 is above its own 5-year median of 11.1.

P/E above the industry

East West Bancorp's P/E of 12.4 is above the Commercial Banks median of 12.1.

P/S above the industry

East West Bancorp's price-to-sales of 5.69 is above the Commercial Banks median of 3.60.

P/B above the industry

East West Bancorp's price-to-book of 1.98 is above the Commercial Banks median of 1.29.

Trading above fair value

The share price of $130.68 is above our fair value estimate of $110.72.

Margin of safety under 20%

The price is 18.0% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 7.7% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew 6.3% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew 15.7% over the last twelve months, against a 5-year average of 18.5% a year.

Growing slower than the industry

Revenue grew 10.4% over the last twelve months; the Commercial Banks median is 11.3%.

Company guidance

No outlook found in earnings releases from the last twelve months.

Gross margin trend

Banks and insurers do not report gross profit.

Return on equity over 15%

Return on equity was 16.6% over the last twelve months and averaged 16.9% over five years.

Return on assets over 1%

Return on assets was 1.8%; for a bank or insurer, 1% or more is considered good.

Return on equity above the industry

East West Bancorp's return on equity of 16.6% is above the Commercial Banks median of 11.5%.

Earnings grew over 5 years

Net income grew 18.5% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 46.4% over the last twelve months, against a 5-year average of 46.1%.

Net margin above the industry

East West Bancorp's net margin of 46.4% is above the Commercial Banks median of 30.3%.

Well capitalized

Equity is 10.5% of total assets; 8% or more is a comfortable cushion.

Loans funded by deposits

Loans equal 82.3% of deposits, so lending is funded by customer deposits.

Adequate loan-loss reserve

The allowance for credit losses is 1.5% of loans; we look for at least 1%.

Efficient operations

Non-interest expense takes 35.5% of revenue; under 60% is efficient for a bank.

Deposits growing

Deposits grew 7.4% over the past year.

Modest borrowings

Borrowings other than deposits are 0.4% of equity.

Pays a dividend

East West Bancorp paid dividends worth 2.4% of the share price over the last twelve months.

Yield below Treasuries

The 2.4% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; East West Bancorp yields 2.4%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Earnings cover

Needs dividends paid and net income.

Cash-flow cover

Needs dividends paid and free cash flow.