June 29, 2023
Top 10 Stock East West Bancorp Strong Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: East West Bancorp – Top 10 Stock in S&P Mid-Cap Index
East West Bancorp is listed as a top 10 stock on June 29, 2023 in the market index S&P MIDCAP because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. The company is safely financed and the professional investor sentiment is positive. Both are encouraging signals for a stock purchase decision, albeit at an above-average share price. Based on the Obermatt 360° View of 79 (top 79% performer), Obermatt assesses an overall strong buy recommendation for East West Bancorp on June 29, 2023.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Regional Banks |
| Index | NASDAQ, D.J. US Banks, S&P MIDCAP |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View East West Bancorp Strong Buy
| 360 METRICS | June 29, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 33 |
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| GROWTH | ||||||||
| GROWTH | 45 |
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| SAFETY | ||||||||
| SAFETY | 99 |
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| SENTIMENT | ||||||||
| SENTIMENT | 75 |
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| 360° VIEW | ||||||||
| 360° VIEW | 79 |
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ANALYSIS: With an Obermatt 360° View of 79 (better than 79% compared with alternatives) for 2023, overall professional sentiment and financial characteristics for the stock East West Bancorp are very positive. The 360° View is based on consolidating four consolidated indicators, with half below and half above average for East West Bancorp. The consolidated Sentiment Rank has a good rank of 75, which means that professional investors are more optimistic about the stock than for 75% of alternative investment opportunities. It also rates well regarding its financing structure, with the consolidated Safety Rank at 99 or better than 99% of its peers when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the stock is expensive and expects low growth. The consolidated Value Rank is only 33, meaning that the share price of East West Bancorp is on the high side, compared with indicators such as revenues, profits, and invested capital. The company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, invested capital growth,and stock returns, with its Growth Rank at 45. ...read more
RECOMMENDATION: With a consolidated 360° View of 79, East West Bancorp is better positioned than 79% of all alternative stock investment opportunities based on the Obermatt Method. As only half of the consolidated Obermatt Ranks exhibit excellent performance, namely the positive professional market sentiment (Sentiment Rank of 75) and safe financing practices (Safety Rank of 99), the case for investing in this stock needs further thought. The Value and the Safety Ranks are below average. The Safety Rank is the least critical of the four consolidated ranks, because it only reflects financing practices. So the question is: How to assess below-average value against above-average sentiment? This may be a case where growth is in the future, not yet reflected in current performance. Companies that might fall into this category are those with intellectual property, such as technology and pharmaceutical companies. In early phases, they are expensive relative to their size and have a lot of capital on their books, as is the case here. Investors expect a better future and are willing to pay a higher price than is warranted by the current company size. These higher prices drive stock price value down in the short term. In this case, future growth may be the strongest driver of the investment case, reflected by institutional investors' opinions. With a weak Value Rank, the question is how much to sacrifice value at the cost of positive sentiment. Sometimes market sentiment is just hype, but sometimes it is right. You pay more than market-average for this stock, but it may be worth it, if the future of East West Bancorp̣ is bright. Prudent investors may only want to invest a smaller portion of their wealth in such situations. Young investors can carry more risk but should still thrive for sufficient diversification. ...read more
Sentiment Strategy: Professional Market Sentiment for East West Bancorp very positive
ANALYSIS: With an Obermatt Sentiment Rank of 75 (better than 75% compared with alternatives) for 2023, overall professional sentiment and engagement for the stock East West Bancorp is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the indicators below and the other half above average for East West Bancorp. Analyst Opinions are at a rank of 93 (better than 93% of alternative investments). Currently, stock research analysts tend to recommend a stock investment in the company. There are also many institutional investors invested in the stock, represented by a Professional Investors rank of 71 which means that currently, professional investors hold more stock in this company than in 71% of alternative investment opportunities. But Analyst Opinions Change has a rank of 25, which means that stock research experts are changing their opinions for the worse in recommending investing in the company. In other words, they are getting more critical of investments in East West Bancorp. Furthermore, Market Pulse has a rank of 28, which means that the current professional news and professional social networks are on the negative side when discussing this company (more negative news than for 72% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 75 (more positive than 75% compared with investment alternatives), East West Bancorp has a reputation among professional investors that is significantly higher than that of its competitors. Three below-market sentiment indicators are a sign of caution, even if the stock has significantly appreciated. If analysts change their opinions, the stock may become too expensive. If the price is on the way down, the trend may continue. This may be a stock with a good reputation and history, but it may have reached its breaking point by now. Investors should look at the Value Ranks as well. If they indicate trouble, it may be around the corner. ...read more
Value Strategy: East West Bancorp Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 33 (worse than 67% compared with alternatives), East West Bancorp shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with three out of four indicators below average for East West Bancorp. Only Price-to-Profit (also referred to as price-earnings, P/E) indicates good stock value with a rank of 87, which means that the stock price compared with what market professionals expect for future profits is lower than for 87% of comparable companies, indicating a good value concerning East West Bancorp's profit levels. But Price-to-Sales is 12 which means that the stock price compared with what market professionals expect for future profits is higher than for 88% of comparable companies, indicating a low value concerning East West Bancorp's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 15 and for dividend yield, which is lower than for 51% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 33, is a hold recommendation based on East West Bancorp's stock price compared with the company's operational size and dividend yields. Can we rely on only one good value indicator? Only if we know the company well. In this case, a high Price-to-Profit Rank, while Price-to-Sales and Price-to-Book are both below the market typical levels, means that the company can charge higher prices for its products and needs less capital to produce them. If this is sustainable, then East West Bancorp is a good investment because profits count most in enterprise valuations. The low dividend yield indicates that the company is confident it can do something with the generated cash that is more valuable than paying the profits out to the shareholders in the form of dividends. ...read more
Growth Strategy: East West Bancorp Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 45 (better than 45% compared with alternatives), East West Bancorp shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, where half of the indicators are below and half above average for East West Bancorp. Profit Growth, with a rank of 90 (better than 90% of its competitors), and Capital Growth, with a rank of 59, are both positive, which is a healthy sign for positive development. But Sales Growth has only a rank of 10, which means that, currently, professionals expect the company to grow less than 90% of its competitors, and Stock Returns are at a rank of 37. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 45, is a hold recommendation for growth and momentum investors. Stock returns that are a thing of the past can be less of a problem. Below-average revenue growth may be caused by divestments of underperforming businesses. If that is the case, then the positive developments of profit and capital growth are signs of a company with growth potential. If these are the reasons, overall growth is well on track to making this stock attractive for growth investors. ...read more
Safety Strategy: East West Bancorp Debt Financing Safety very solid
| SAFETY METRICS | June 29, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 88 |
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| REFINANCING | ||||||||
| REFINANCING | 37 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 100 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 99 |
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ANALYSIS: With an Obermatt Safety Rank of 99 (better than 99% compared with alternatives) for 2023, the company East West Bancorp has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of East West Bancorp is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above average for East West Bancorp. Leverage is at a rank of 88, meaning the company has a below-average debt-to-equity ratio. It has less debt than 88% of its competitors. Liquidity is also good at a rank of 100, meaning the company generates more profit to service its debt than 100% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 37, which means that the portion of the debt that is about to be refinanced is above-average. It has more debt in the refinancing stage than 63% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 99 (better than 99% compared with alternatives), East West Bancorp has a financing structure that is significantly safer than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for East West Bancorp. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. ...read more
Combined financial peformance: East West Bancorp Above-Average Financial Performance
| COMBINED PERFORMANCE | June 29, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 33 |
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| GROWTH | ||||||||
| GROWTH | 45 |
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| SAFETY | ||||||||
| SAFETY | 100 |
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| COMBINED | ||||||||
| COMBINED | 74 |
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ANALYSIS: With an Obermatt Combined Rank of 74 (better than 74% compared with investment alternatives), East West Bancorp (Regional Banks, USA) shares have above-average financial characteristics compared with similar stocks. Shares of East West Bancorp are low in value (priced high) with a consolidated Value Rank of 33 (worse than 67% of alternatives) and show below-average growth (Growth Rank of 45) but are safely financed (Safety Rank of 99), which means low debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 74, is a buy recommendation based on East West Bancorp's financial characteristics. As the company East West Bancorp's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 33) and low growth (Obermatt Growth Rank of 45), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. In this case, good financing practices (Obermatt Safety Rank of 99) are a positive sign, because it may allow the company to weather challenging times until the hoped-for cash flows materialize. This may be true for high-tech or biotechnology companies with enough cash to sustain prolonged business development. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and unattractive today. In such cases, the Obermatt Method has limited value, as it is based on facts we can observe today. If the facts lie all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that account for a small fraction of a safe portfolio. ...read more
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