Chemical Financial (NASDAQ:CHFC) and Bank of Commerce (NASDAQ:BOCH) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, institutional ownership, earnings, dividends, risk and analyst recommendations.
This table compares Chemical Financial and Bank of Commerce’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Bank of Commerce||25.21%||10.83%||1.13%|
This is a breakdown of recent recommendations and price targets for Chemical Financial and Bank of Commerce, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Bank of Commerce||0||1||0||0||2.00|
Chemical Financial currently has a consensus price target of $53.83, indicating a potential upside of 29.19%. Bank of Commerce has a consensus price target of $13.50, indicating a potential upside of 26.29%. Given Chemical Financial’s stronger consensus rating and higher probable upside, analysts plainly believe Chemical Financial is more favorable than Bank of Commerce.
Insider and Institutional Ownership
86.7% of Chemical Financial shares are owned by institutional investors. Comparatively, 48.9% of Bank of Commerce shares are owned by institutional investors. 1.0% of Chemical Financial shares are owned by company insiders. Comparatively, 5.7% of Bank of Commerce shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Earnings & Valuation
This table compares Chemical Financial and Bank of Commerce’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Chemical Financial||$924.53 million||3.22||$284.02 million||$3.94||10.58|
|Bank of Commerce||$56.72 million||3.42||$15.73 million||$0.87||12.29|
Chemical Financial has higher revenue and earnings than Bank of Commerce. Chemical Financial is trading at a lower price-to-earnings ratio than Bank of Commerce, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Chemical Financial has a beta of 1.48, meaning that its stock price is 48% more volatile than the S&P 500. Comparatively, Bank of Commerce has a beta of 0.59, meaning that its stock price is 41% less volatile than the S&P 500.
Chemical Financial pays an annual dividend of $1.36 per share and has a dividend yield of 3.3%. Bank of Commerce pays an annual dividend of $0.20 per share and has a dividend yield of 1.9%. Chemical Financial pays out 34.5% of its earnings in the form of a dividend. Bank of Commerce pays out 23.0% 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. Chemical Financial has increased its dividend for 7 consecutive years. Chemical Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Chemical Financial beats Bank of Commerce on 12 of the 17 factors compared between the two stocks.
About Chemical Financial
Chemical Financial Corporation operates as a financial holding company of Chemical Bank that offers a range of banking and fiduciary products and services to residents and business customers. It offers business and personal checking accounts, savings and individual retirement accounts, time deposit instruments, electronically accessed banking products, residential and commercial real estate financing, commercial lending, consumer financing, debit cards, safe deposit box, money transfer, automated teller machines, insurance and investment products, corporate and personal wealth management, and mortgage banking and other banking services. The company also offers mutual funds and annuities; trust, investment management, and custodial services; financial and estate planning; and retirement and employee benefit programs. As of December 31, 2018, it operated through 212 banking offices located in Michigan, northeast Ohio, and northern Indiana. The company has 8 loan production offices and approximately 237 automated teller machines. Chemical Financial Corporation was founded in 1917 and is headquartered in Detroit, Michigan.
About Bank of Commerce
Bank of Commerce Holdings operates as the bank holding company for Redding Bank of Commerce that provides a range of financial services and products for retail customers and small to medium-sized businesses in California. Its deposit products include checking, interest-bearing checking, money market, and savings accounts, as well as certificates of deposit. The company also offers commercial loans, commercial real estate loans, residential real estate loans, consumer loans, construction loans, term loans, and small business administration loans. In addition, it provides sweep arrangements and safe deposit boxes; and collection, electronic banking, payroll processing, and ATM and point of sale services. The company operates through 10 full service facilities and 1 limited service facility in northern California. Bank of Commerce Holdings is headquartered in Sacramento, California.
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