Head to Head Analysis: Hanmi Financial (NASDAQ:HAFC) and UMB Financial (NASDAQ:UMBF)

UMB Financial (NASDAQ:UMBF) and Hanmi Financial (NASDAQ:HAFC) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, institutional ownership, risk, dividends, analyst recommendations, profitability and earnings.

Analyst Ratings

This is a summary of current recommendations for UMB Financial and Hanmi Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
UMB Financial	0	3	4	0	2.57
Hanmi Financial	0	3	2	0	2.40

UMB Financial presently has a consensus target price of $128.71, suggesting a potential upside of 48.12%. Hanmi Financial has a consensus target price of $25.75, suggesting a potential upside of 24.40%. Given UMB Financial’s stronger consensus rating and higher probable upside, equities research analysts clearly believe UMB Financial is more favorable than Hanmi Financial.

Insider & Institutional Ownership

87.8% of UMB Financial shares are owned by institutional investors. Comparatively, 88.7% of Hanmi Financial shares are owned by institutional investors. 5.5% of UMB Financial shares are owned by company insiders. Comparatively, 1.6% of Hanmi Financial shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Volatility & Risk

UMB Financial has a beta of 0.71, meaning that its share price is 29% less volatile than the S&P 500. Comparatively, Hanmi Financial has a beta of 0.68, meaning that its share price is 32% less volatile than the S&P 500.

Earnings & Valuation

This table compares UMB Financial and Hanmi Financial”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
UMB Financial	$1.47 billion	4.30	$441.24 million	$8.99	9.67
Hanmi Financial	$233.50 million	2.68	$62.20 million	$2.05	10.10

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

Profitability

This table compares UMB Financial and Hanmi Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
UMB Financial	15.76%	13.73%	0.98%
Hanmi Financial	14.45%	8.64%	0.82%

Dividends

UMB Financial pays an annual dividend of $1.60 per share and has a dividend yield of 1.8%. Hanmi Financial pays an annual dividend of $1.08 per share and has a dividend yield of 5.2%. UMB Financial pays out 17.8% of its earnings in the form of a dividend. Hanmi Financial pays out 52.7% 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. UMB Financial has raised its dividend for 32 consecutive years.

Summary

UMB Financial beats Hanmi Financial on 14 of the 17 factors compared between the two stocks.

About UMB Financial

UMB Financial Corporation operates as the bank holding company that provides banking services and asset servicing in the United States and internationally. The Commercial Banking segment provides commercial loans and credit card; commercial real estate financing; letters of credit; loan syndication, and consultative service; various business solutions including asset-based lending, mezzanine debt, and minority equity investment; and treasury management service, such as depository service, account reconciliation, cash management tool, accounts payable and receivable solution, electronic fund transfer and automated payment, controlled disbursement, lockbox service, and remote deposit capture service. The Institutional Banking segment offers fund, asset management, and healthcare service to institutional clients; and fund administration and accounting, investor service and transfer agency, mutual fund service, alternative investment service, fixed income sale, trading and underwriting, and corporate trust and escrow service, as well as institutional custody service. This segment also provides healthcare payment solution includes custodial service for health saving accounts and private label, multipurpose debit cards to insurance carriers, third-party administrator, software companies, employers, and financial institutions. The Personal Banking segment offers deposit account, retail credit card, private banking, installment loan, home equity line of credit, residential mortgage, as well as internet banking, ATM network, private banking, brokerage and insurance service, and investment advisory, custody, and trust services. It operates through a network of branches and offices. The company was founded in 1913 and is headquartered in Kansas City, Missouri.

About Hanmi Financial

Hanmi Financial Corporation operates as the holding company for Hanmi Bank that provides business banking products and services in the United States. It offers various deposit products, including noninterest-bearing checking accounts, savings accounts, negotiable order of withdrawal accounts, money market accounts, and certificates of deposit. The company also provides real estate loans, such as commercial property, construction, and residential property loans; and commercial and industrial loans, such as commercial term loans and commercial lines of credit; and international finance and trade services and products, such as letters of credit, and import and export financing. In addition, it offers small business administration loans for business purposes, which comprise owner-occupied commercial real estate, business acquisitions, start-ups, franchise financing, working capital, improvements and renovations, inventory and equipment, and debt-refinancing, as well as equipment lease financing. The company was founded in 1982 and is headquartered in Los Angeles, California.