East West Bancorp Inc (NASDAQ: EWBC)

Sector: Financial Services Industry: Banks - Regional CIK: 0001069157
Market Cap 15.75 Bn
P/B 1.84
P/E 12.48
P/S 5.95
ROIC (Qtr) 10.84
Div Yield % 2.63
Rev 1y % (Qtr) 20.64
Total Debt (Qtr) 3.18 Bn
Debt/Equity (Qtr) 0.37

About

Price action

Investment thesis

Bull case

  • Strong operating cash flow of 1.29B provides robust 0.40x coverage of total debt 3.18B, indicating excellent debt servicing capability and financial flexibility.
  • Strong tangible asset base of 79.20B provides 24.88x coverage of total debt 3.18B, indicating robust asset backing and low credit risk.
  • Operating cash flow of 1.29B provides strong 17.47x coverage of stock compensation 73.76M, indicating sustainable incentive practices.
  • Strong operating cash flow of 1.29B provides 1.55x coverage of SG&A expenses 831.30M, showing efficient operational cost management.
  • Operating cash flow of 1.29B provides strong 6.37x coverage of operating expenses 202.39M, showing operational efficiency.

Bear case

  • Operating cash flow of 1.29B barely covers its investment activities of (5.44B), with a coverage ratio of -0.24, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 1.29B provides thin coverage of dividend payments of (327.79M) with a -3.93 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of 1.29B represents just -2.94x of debt issuance (437.50M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Retained earnings of 8.03B provide limited buffer against comprehensive income items of (375.56M), which is -21.38x, indicating elevated exposure to market risks.
  • Operating cash flow of 1.29B is outpaced by equity issuance of (131.25M) (-9.82 ratio), indicating concerning reliance on equity markets for funding operations.

Peer comparison

Companies in the Banks - Regional
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 USB Us Bancorp \De\ 84.44 Bn 12.40 3.25 77.98 Bn
2 PNC Pnc Financial Services Group, Inc. 84.36 Bn 13.61 3.73 62.34 Bn
3 NU Nu Holdings Ltd. 81.47 Bn 32.21 5.79 4.49 Bn
4 NWG NatWest Group plc 66.53 Bn 9.88 3.05 169.04 Bn
5 TFC Truist Financial Corp 64.60 Bn 13.18 3.53 71.11 Bn
6 MTB M&T Bank Corp 32.73 Bn 12.47 3.60 14.99 Bn
7 FITB Fifth Third Bancorp 31.96 Bn 14.15 3.93 18.94 Bn
8 FCNCA First Citizens Bancshares Inc /De/ 28.98 Bn 12.78 3.26 40.00 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.19 0.14
EV to Cash from Ops. EV/CFO 11.53 7.21
EV to Debt EV to Debt 4.67 5.20
EV to EBIT EV/EBIT 9.20 14.98
EV to EBITDA EV/EBITDA 8.11 8.92
EV to Free Cash Flow [EV/FCF] EV/FCF 11.53 8.87
EV to Market Cap EV to Market Cap 0.94 1.04
EV to Revenue EV/Rev 5.61 -3.76
Price to Book Value [P/B] P/B 1.84 1.17
Price to Earnings [P/E] P/E 12.48 15.63
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 3.85 271.44
Dividend Payout Ratio % Div Payout % (Qtr) 25.70 35.28
Dividend per Basic Share Div per Share (Qtr) 2.40 0.89
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 25.65 34.52
Interest Coverage Interest Coverage 0.00 -0.05
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 0.00 -73.15
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -4.30 15.78
Dividend Growth (1y) % Div 1y % (Qtr) 9.09 5.32
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 13.55 110.93
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 15.05 38.80
EBIT Growth (1y) % EBIT 1y % (Qtr) 11.08 61.46
EBT Growth (1y) % EBT 1y % (Qtr) 11.08 61.37
EPS Growth (1y) % EPS 1y % (Qtr) 14.54 76.34
FCF Growth (1y) % FCF 1y % (Qtr) -12.54 161.72
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 8.00 14.15
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.03 0.04
Cash Payout Ratio Cash Payout (Qtr) 0.25 0.26
Cash Ratio Cash Ratio 0.00 0.00
Current Ratio Current Ratio 0.00 0.01
Debt to Equity Ratio Debt/Equity (Qtr) 0.37 0.53
Interest Cover Ratio Interest Cover Ratio 0.00 -0.05
Times Interest Earned Times Interest Earned 0.00 -0.05
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 69.20 147.97
EBIT Margin % EBIT Margin % (Qtr) 60.96 155.41
EBT Margin % EBT Margin % (Qtr) 60.96 154.66
Gross Margin % Gross Margin % (Qtr) 100.00 97.82
Net Profit Margin % Net Margin % (Qtr) 47.70 115.63