Reviewing Community West Bancshares (NASDAQ:CWBC) & Northern Trust (NASDAQ:NTRS)

Community West Bancshares (NASDAQ:CWBC) and Northern Trust (NASDAQ:NTRS) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, dividends, risk, analyst recommendations, institutional ownership, valuation and earnings.

Valuation and Earnings

This table compares Community West Bancshares and Northern Trust”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Community West Bancshares	$46.27 million	7.70	$25.54 million	$1.89	9.99
Northern Trust	$7.63 billion	2.53	$1.11 billion	$4.53	20.83

Northern Trust has higher revenue and earnings than Community West Bancshares. Community West Bancshares is trading at a lower price-to-earnings ratio than Northern Trust, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

33.8% of Community West Bancshares shares are held by institutional investors. Comparatively, 83.2% of Northern Trust shares are held by institutional investors. 11.2% of Community West Bancshares shares are held by company insiders. Comparatively, 0.6% of Northern Trust shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Community West Bancshares and Northern Trust, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Community West Bancshares	0	1	2	0	2.67
Northern Trust	3	6	3	0	2.00

Community West Bancshares currently has a consensus price target of $20.33, suggesting a potential upside of 7.64%. Northern Trust has a consensus price target of $90.42, suggesting a potential downside of 4.20%. Given Community West Bancshares’ stronger consensus rating and higher probable upside, analysts clearly believe Community West Bancshares is more favorable than Northern Trust.

Dividends

Community West Bancshares pays an annual dividend of $0.48 per share and has a dividend yield of 2.5%. Northern Trust pays an annual dividend of $3.00 per share and has a dividend yield of 3.2%. Community West Bancshares pays out 25.4% of its earnings in the form of a dividend. Northern Trust pays out 66.2% 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.

Profitability

This table compares Community West Bancshares and Northern Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Community West Bancshares	7.51%	9.99%	0.88%
Northern Trust	10.53%	12.24%	0.90%

Risk and Volatility

Community West Bancshares has a beta of 0.86, suggesting that its stock price is 14% less volatile than the S&P 500. Comparatively, Northern Trust has a beta of 1.08, suggesting that its stock price is 8% more volatile than the S&P 500.

Summary

Northern Trust beats Community West Bancshares on 11 of the 16 factors compared between the two stocks.

About Community West Bancshares

Community West Bancshares operates as the bank holding company for Community West Bank, N.A. that provides various financial products and services in California. The company offers deposit products, such as checking accounts, savings accounts, money market accounts, and fixed rate and fixed maturity certificates of deposits; and cash management products. It also provides commercial, commercial real estate, consumer, manufactured housing, and small business administration loans, as well as agricultural loans for real estate and operating lines; home equity lines of credit collateralized by residential real estate; single family real estate loans; and installment loans consisting of automobile and general-purpose loans. The company serves small to medium-sized businesses and their owners, professionals, high-net worth individuals, and non-profit organizations. Community West Bancshares was founded in 1989 and is headquartered in Goleta, California.

About Northern Trust

Northern Trust Corporation, a financial holding company, provides wealth management, asset servicing, asset management, and banking solutions for corporations, institutions, families, and individuals worldwide. It operates in two segments, Asset Servicing and Wealth Management. The Asset Servicing segment offers asset servicing and related services, including custody, fund administration, investment operations outsourcing, investment management, investment risk and analytical services, employee benefit services, securities lending, foreign exchange, treasury management, brokerage services, transition management services, banking, and cash management services. This segment serves corporate and public retirement funds, foundations, endowments, fund managers, insurance companies, sovereign wealth funds, and other institutional investors. The Wealth Management segment offers trust, investment management, custody, and philanthropic; financial consulting; guardianship and estate administration; family business consulting; family financial education; brokerage services; and private and business banking services. This segment serves high-net-worth individuals and families, business owners, executives, professionals, retirees, and established privately held businesses. The company also provides asset management services, such as active and passive equity; active and passive fixed income; cash management; muti-asset and alternative asset classes comprising private equity and hedge funds of funds; and multi-manager advisory services and products through separately managed accounts, bank common and collective funds, registered investment companies, exchange traded funds, non-U.S. collective investment funds, and unregistered private investment funds. In addition, it offers overlay and other risk management services. Northern Trust Corporation was founded in 1889 and is headquartered in Chicago, Illinois.