Critical Review: Hanmi Financial (NASDAQ:HAFC) & Mizuho Financial Group (NYSE:MFG)

Mizuho Financial Group (NYSE:MFG) and Hanmi Financial (NASDAQ:HAFC) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their valuation, institutional ownership, profitability, earnings, dividends, risk and analyst recommendations.

Profitability

This table compares Mizuho Financial Group and Hanmi Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Mizuho Financial Group	17.15%	12.82%	0.49%
Hanmi Financial	19.82%	11.20%	1.13%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Mizuho Financial Group and Hanmi Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mizuho Financial Group	0	0	0	1	4.00
Hanmi Financial	0	4	2	0	2.33

Hanmi Financial has a consensus target price of $33.00, indicating a potential upside of 4.50%. Given Hanmi Financial’s higher probable upside, analysts clearly believe Hanmi Financial is more favorable than Mizuho Financial Group.

Dividends

Mizuho Financial Group pays an annual dividend of $0.14 per share and has a dividend yield of 1.3%. Hanmi Financial pays an annual dividend of $1.12 per share and has a dividend yield of 3.5%. Mizuho Financial Group pays out 17.1% of its earnings in the form of a dividend. Hanmi Financial pays out 37.7% 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. Hanmi Financial has increased its dividend for 1 consecutive years. Hanmi Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Mizuho Financial Group and Hanmi Financial”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mizuho Financial Group	$60.35 billion	2.20	$7.64 billion	$0.82	13.12
Hanmi Financial	$444.90 million	2.10	$76.09 million	$2.97	10.63

Mizuho Financial Group has higher revenue and earnings than Hanmi Financial. Hanmi Financial is trading at a lower price-to-earnings ratio than Mizuho Financial Group, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

3.3% of Mizuho Financial Group shares are owned by institutional investors. Comparatively, 88.7% of Hanmi Financial shares are owned by institutional investors. 0.0% of Mizuho Financial Group shares are owned by insiders. Comparatively, 2.1% of Hanmi Financial shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Volatility and Risk

Mizuho Financial Group has a beta of 0.46, indicating that its share price is 54% less volatile than the S&P 500. Comparatively, Hanmi Financial has a beta of 0.72, indicating that its share price is 28% less volatile than the S&P 500.

Summary

Hanmi Financial beats Mizuho Financial Group on 10 of the 18 factors compared between the two stocks.

About Mizuho Financial Group

Mizuho Financial Group, Inc., together with its subsidiaries, engages in banking, trust, securities, and other businesses related to financial services in Japan, the Americas, Europe, Asia/Oceania, and internationally. It operates through Retail & Business Banking Company, Corporate & Institutional Company, Global Corporate Company, Global Markets Company, Asset Management Company, and Others segments. The company provides deposit products; syndicated, housing, and card loans; business matching services; and advisory services related to overseas expansions, and mergers and acquisitions-related services. It also offers consulting services, including asset management and asset succession; payroll services; and sells lottery tickets issued by prefectures and ordinance-designated cities. In addition, it offers fund management, underwriting of equity and bonds, risk hedging products, etc. for corporate customers; solutions based on capital management, business strategy, and financial strategy; real estate services; advisory services and solutions, such as advice on proposals on various investment products to financial institutions; and financial services that include funding support and public bonds underwriting. Further, the company offers corporate finance and transaction banking srvices; sales and trading services; investment products; pension funds; and ALM and investment services, including stable capital raising and balance sheet management, as well as management of fixed income, equity, and other securities portfolios. Additionally, the company provides online banking, cash management solutions, currency transaction, trade finance, custody, yen correspondence settlement, and research and consulting services; trust, securitization and structured finance, and stock transfers; and private banking and information technology-related services. Mizuho Financial Group, Inc. was founded in 2000 and is headquartered in Tokyo, Japan.

About Hanmi Financial

Hanmi Financial Corporation operates as the holding company for Hanmi Bank that provides business banking products and services in the United States. It offers various deposit products, including noninterest-bearing checking accounts, savings accounts, negotiable order of withdrawal accounts, money market accounts, and certificates of deposit. The company also provides real estate loans, such as commercial property, construction, and residential property loans; and commercial and industrial loans, such as commercial term loans and commercial lines of credit; and international finance and trade services and products, such as letters of credit, and import and export financing. In addition, it offers small business administration loans for business purposes, which comprise owner-occupied commercial real estate, business acquisitions, start-ups, franchise financing, working capital, improvements and renovations, inventory and equipment, and debt-refinancing, as well as equipment lease financing. The company was founded in 1982 and is headquartered in Los Angeles, California.