East West Bancorp (NASDAQ:EWBC) and Bank of New York Mellon (NYSE:BK) Critical Analysis

East West Bancorp (NASDAQ:EWBC) and Bank of New York Mellon (NYSE:BK) are both large-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their institutional ownership, dividends, analyst recommendations, profitability, risk, valuation and earnings.

Risk and Volatility

East West Bancorp has a beta of 1.29, indicating that its stock price is 29% more volatile than the S&P 500. Comparatively, Bank of New York Mellon has a beta of 1.08, indicating that its stock price is 8% more volatile than the S&P 500.

Valuation and Earnings

This table compares East West Bancorp and Bank of New York Mellon”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
East West Bancorp	$3.99 billion	3.38	$1.16 billion	$7.92	12.29
Bank of New York Mellon	$17.87 billion	3.11	$3.29 billion	$4.60	16.37

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

Institutional and Insider Ownership

89.5% of East West Bancorp shares are held by institutional investors. Comparatively, 85.3% of Bank of New York Mellon shares are held by institutional investors. 1.0% of East West Bancorp shares are held by company insiders. Comparatively, 0.1% of Bank of New York Mellon shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings and target prices for East West Bancorp and Bank of New York Mellon, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
East West Bancorp	0	1	12	0	2.92
Bank of New York Mellon	0	5	8	0	2.62

East West Bancorp presently has a consensus price target of $99.46, indicating a potential upside of 2.17%. Bank of New York Mellon has a consensus price target of $76.69, indicating a potential upside of 1.84%. Given East West Bancorp’s stronger consensus rating and higher possible upside, equities research analysts plainly believe East West Bancorp is more favorable than Bank of New York Mellon.

Dividends

East West Bancorp pays an annual dividend of $2.20 per share and has a dividend yield of 2.3%. Bank of New York Mellon pays an annual dividend of $1.88 per share and has a dividend yield of 2.5%. East West Bancorp pays out 27.8% of its earnings in the form of a dividend. Bank of New York Mellon pays out 40.9% 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. Bank of New York Mellon has increased its dividend for 14 consecutive years. Bank of New York Mellon is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares East West Bancorp and Bank of New York Mellon’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
East West Bancorp	24.96%	16.07%	1.61%
Bank of New York Mellon	9.44%	12.06%	1.05%

Summary

East West Bancorp beats Bank of New York Mellon on 12 of the 17 factors compared between the two stocks.

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.

About Bank of New York Mellon

The Bank of New York Mellon Corporation provides a range of financial products and services in the United States and internationally. The company operates through Securities Services, Market and Wealth Services, Investment and Wealth Management, and other segments. The Securities Services segment offers custody, trust and depositary, accounting, exchange-traded funds, middle-office solutions, transfer agency, services for private equity and real estate funds, foreign exchange, securities lending, liquidity/lending services, and data analytics. This segment also provides trustee, paying agency, fiduciary, escrow and other financial, issuer, and support services for brokers and investors. The Market and Wealth Services segment offers clearing and custody, investment, wealth and retirement solutions, technology and enterprise data management, trading, and prime brokerage services. This segment also provides integrated cash management solutions, including payments, foreign exchange, liquidity management, receivables processing and payables management, and trade finance and processing services. The Investment and Wealth Management segment offers investment management strategies and distribution of investment products, investment management, custody, wealth and estate planning, private banking, investment, and information management services. The Other segment engages in the provision of leasing, corporate treasury, derivative and other trading, corporate and bank-owned life insurance, renewable energy investment, and business exit services. It serves central banks and sovereigns, financial institutions, asset managers, insurance companies, corporations, local authorities and high net-worth individuals, and family offices. The Bank of New York Mellon Corporation was founded in 1784 and is headquartered in New York, New York.