Hope Bancorp Inc (NASDAQ: HOPE)

Sector: Financial Services Industry: Banks - Regional CIK: 0001128361
Market Cap 1.34 Bn
P/B 0.59
P/E 27.62
P/S 3.09
ROIC (Qtr) 2.25
Div Yield % 6.33
Rev 1y % (Qtr) 17.60
Total Debt (Qtr) 194.25 Mn
Debt/Equity (Qtr) 0.09

About

Price action

Investment thesis

Bull case

  • Strong operating cash flow of 137.42M provides robust 0.71x coverage of total debt 194.25M, indicating excellent debt servicing capability and financial flexibility.
  • Strong tangible asset base of 17.98B provides 92.58x coverage of total debt 194.25M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 137.42M provides strong 17.22x coverage of stock compensation 7.98M, indicating sustainable incentive practices.
  • Robust free cash flow of 125.44M exceeds capital expenditure of 11.98M by 10.47x, indicating strong organic growth funding capability.
  • Cash reserves of 454.91M provide ample 5.25x coverage of acquisition spending 86.70M, enabling strategic growth opportunities.

Bear case

  • Operating cash flow of 137.42M barely covers its investment activities of 518.41M, with a coverage ratio of 0.27, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 137.42M provides thin coverage of dividend payments of (69.69M) with a -1.97 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Operating earnings of 64.83M show weak coverage of depreciation charges of 70.96M, with a 0.91 ratio indicating high capital intensity and potential reinvestment needs.
  • High depreciation of 70.96M relative to operating cash flow of 137.42M, which is 0.52x suggests significant maintenance capital requirements affecting free cash flow.
  • Free cash flow of 125.44M represents just -0.53x of debt issuance (235M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

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 0.05 0.14
EV to Cash from Ops. EV/CFO 6.17 7.21
EV to Debt EV to Debt 4.37 5.20
EV to EBIT EV/EBIT 13.08 14.98
EV to EBITDA EV/EBITDA 6.25 8.92
EV to Free Cash Flow [EV/FCF] EV/FCF 6.76 8.87
EV to Market Cap EV to Market Cap 0.63 1.04
EV to Revenue EV/Rev 1.96 -3.76
Price to Book Value [P/B] P/B 0.59 1.17
Price to Earnings [P/E] P/E 27.62 15.63
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.69 271.44
Dividend Payout Ratio % Div Payout % (Qtr) 140.00 35.28
Dividend per Basic Share Div per Share (Qtr) 0.56 0.89
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 57.20 34.52
Interest Coverage Interest Coverage 0.00 -0.05
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -25.45 -73.15
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -33.19 15.78
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 5.32
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -52.45 110.93
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -21.34 38.80
EBIT Growth (1y) % EBIT 1y % (Qtr) -52.38 61.46
EBT Growth (1y) % EBT 1y % (Qtr) -52.38 61.37
EPS Growth (1y) % EPS 1y % (Qtr) -52.94 76.34
FCF Growth (1y) % FCF 1y % (Qtr) -7.83 161.72
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -10.33 14.15
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.02 0.04
Cash Payout Ratio Cash Payout (Qtr) 0.47 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) 0.09 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) 31.40 147.97
EBIT Margin % EBIT Margin % (Qtr) 14.99 155.41
EBT Margin % EBT Margin % (Qtr) 14.99 154.66
Gross Margin % Gross Margin % (Qtr) 100.00 97.82
Net Profit Margin % Net Margin % (Qtr) 11.20 115.63