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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
East West Bancorp, Inc. (XNAS:EWBC) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
EWBC
Name:
EAST WEST BANCORP, INC. (XNAS:EWBC)
Sector:
285.89M
Industry:
Banks�Diversified
CEO:
Mr. Dominic Ng
Total Employees:
3,100
Our Technological Advancement Rating
Our Rating:
A
Technological advancement compared to industry is 257.84% higher
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF EAST WEST BANCORP, INC.(EWBC) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND BANKS�DIVERSIFIED INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
70.5
One Month Price Target:
$71.09
Six Month Price Target :
$74.04
Likely Price in One Year's Time:
Ticker:
$77.59
Likely Trading Range Today Under (Normal Volatility)
$70.2
Price Upper limit ($) :
$70.95
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$66.06
This week:
$60.56
This month :
$50.63
Other Primary facts
Market Cap:
9.81B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
140.92M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
22.5%
-11.96%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$91.11
$81.56
$49.89
$59.44
Medium risk (<10%) entry points
Buy Call
Sell Call
$78.46
Buy Put:
Sell Put:
$76.42
$62.52
$64.58
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
EWBC
Sharpe Ratio:
3.25%
Comparison:
EWBC, is amongst the top 20% stocks with highest risk-adjusted returns
Sharpe ratio is 403.07% higher than the industry
& ratio is 42.58% higher than the market/S&P 500 average
Average Returns/Yield of
EWBC
Daily returns:
0.11%
Weekly returns:
0.55%
Monthly returns:
2.21%
Yearly returns:
6.86%
Comparison of returns:
Average annual returns/yield (last 3 years) is 286.24% above industry average
Classification:
EWBC, is amongst the top 20% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.82
Statistical test of Returns:
EWBC has not yielded statistically significant higher returns when compared to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
3.12%
Weekly Volatility:
6.98%
Monthly Volatility:
13.97%
Yearly Volatility:
48.38%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.58%
Volatility in last five trading days has been -81.32% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-6.30%
Weekly VaR:
-14.09%
Monthly VaR:
-28.19%
How Much Can the price of
EWBC
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-24%
Worst case (decline):
>85%
This translates to price declining to:
$53.82
This translates to price declining to:
$10.58
Severe Crash Probability
Risk of crash in next 6/12 months: High (50-70%)
What is Value at Risk (VaR)?
Risk Fundamentals
EWBC is a 98.96% riskier investment compared to the market/S&P 500 & is 70.45% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is 10.95% above industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
EWBC
Beta in relation to market/S&P 500--1.50
Expected beta in 1 year's time:
1.077
Expected beta in 3 year's time:
1.523
Unlevered (debt free) Beta:
1.45
Beta in relation to Nasdaq (XNAS):
0.573
Beta in relation to all global stocks::
0.887
Beta Comparison & Analysis
Beta of competitors/peers::
0.903
Beta is 65.66% higher than peers
Average Industry Beta:
1.341
Beta is 11.56% above industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
12.09%
Sustainable growth rate is 17.73% above industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.131
Alpha is -338.65% below industry average alpha yield
Alpha is 833% higher than market/& is unsustainably high
Analysis of Cost of Capital of
EWBC
Equity cost of capital:
0.134
Equity cost of capital is 8.61% above industry mean WACC
Unlevered (without debt) cost of capital:
12.98%
Before-tax cost of debt:
22.55%
After-tax cost of debt:
17.82%
Overall debt rating:
Non-investment grade (junk/speculative grade
Weighted average cost of capital (WACC):
17.82%
WACC is 17.45% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$13.27
Revenue growth rate per share of (3Y):
1.74
Annual revenue growth rate is 9.72% above the industry average
EPS:
$6.32
Expected Annual growth rate of EPS (3Y):
9.63%
Expected future EPS growth rate is 11.22% higher than the Banks�Diversified industry
Free cash flow (FCF) per share:
$7.49
Balance sheet equity growth per share: 53.32%
Equity growth rate per share is 145.33% higher than the industry
Debt per share
$1.61
EBITDA per share
$9.51
Valuation Analysis Today of
EWBC
P/E Ratio:
10.73
P/E Ratio of Competitors/Peers:
28.6
P/E ratio is -62.47% lower than main peers & is 6.30% higher than the industry
Stock price/value with industry average P/E ratio: $63.82
EWBC is 10.46% overvalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $33.56
Present value of the expected future dividends only: $16.38
P/S (Price to Sales ratio):
5.31
Price to sales ratio is 42.39% above the industry mean
P/B (Price to book value ratio):
1.74
Price to free cash flow: 9.41
Price to free cash flow ratio is 36.16% higher than the industry
Net income growth rate (3Y):
26.95%
Net income growth rate is -30.12% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 6.50%
Dividend yeild: 2.07%
Previous Dividend: $0.40
Previous adjusted dividend: $0.40
Previous Dividend: $1.46
Expected next dividend best case: $0.44
Expected next dividend worst case: $0.36
Average dividend payment (long-term): $0.32
Average dividend increase/decrease (growth rate) % per period: 4.12%
Expected next dividend payment date: 15/08/2022
Expected next dividend record date: 08/01/2022
Expected next dividend declaration date: 20/07/2022
Previous dividend payment date: 16/05/2022
Previous dividend record date: 05/02/2022
Previous dividend declaration date: 21/04/2022
Dividend History:
2022-04-29--$0.40
2021-10-29--$0.33
2021-04-30--$0.33
2022-02-04--$0.40
2021-07-30--$0.33
2021-02-08--$0.33
Dividend growth rate is -311.09% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
3.98%
Net debt to equity ratio:
-75.89%
Debt to assets ratio:
0.36%
Net debt to assets ratio:
-6.95%
Debt-to-asset ratio is -99.60% below industry average
Ability to repay debt:
Interest coverage ratio:
17.66
Interest coverage ratio is 326.42% more than industry average
Looking forward:
Debt growth rate:
-45.39%
Annual debt growth is 288% higher than industry average debt growth rate
Debt repayment rate in last quarter: 43.60%
Analysis of Key Statistics
Correlation of price movement with the market:
0.466
Statistical significance of correlation:
EWBC has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.68
Stock price is -31.51% less correlated with the market compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.68
Correlation of price movement with Nasdaq (^IXIC):
0.008
Covariance of price movement with the market:
0.015
Kurtosis
5.388
Returns have moderate fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
0.692
Returns are right (positive) skewed; mean returns are greater than median and mode returns
Fundamental Analysis & Dupont Analysis of
EWBC
Gross Profit Margin Ratio:
-
Operating Profit Margin Ratio:
0.00%
-
Net Profit Margin Ratio:
-
Effective Tax Rate:
19.05%
Effective tax rate is 24.72% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
15.88%
Return on equity (ROE) is 22.10% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
1.46%
Return on assets (ROA) is 28.57% higher than the industry
Financial Leverage:
1.0x
Current Ratio:
0
-
Cash Conversion Cycle (days):
0
-
The remaining useful life of property plant & equipment is: 3.0 years
Stock based compensation to net income ratio:
0.93%
In-depth Efficiency Analysis
Revenue generated per employee:
603.0K
Each employee generates 44% more revenue than industry average revenue per employee
EBITDA generated per employee:
432.4K
Each employee generates 88% more EBITDA than industry average revenue per employee
Profit generated per employee:
292.1K
Each employee generates 93% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
92.2K
Each employee generates -237% less free cash flow than industry average revenue per employee
Assets/Capital per employee
3.5M
Each employee generates -237% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
EWBC
HBANO
NEWHOLD INVESTMENT II UNT (XNAS:NHICU)
MORNINGSTAR, INC. (XNAS:MORN)
ZIONS BANCORPORATION, NATIONAL ASSOCIATION (XNAS:ZION)
LPL FINANCIAL HOLDINGS INC. (XNAS:LPLA)
FIRST CITIZENS BANCSHARES, INC. (XNAS:FCNCA)
MARKETAXESS HOLDINGS INC. (XNAS:MKTX)
ERIE INDEMNITY COMPANY (XNAS:ERIE)
ARES CAPITAL CORPORATION (XNAS:ARCC)
Current Analyst Ratings
Strong buy�13%
Buy�17%
Hold�25%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
1.87B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
-
-
-
476.04M
476.04M
-
-
-
1.67B
75.89M
145.86M
1.34B
-
905.64M
1.12B
213.16M
905.64M
Statement of Cash Flow
Date:
Period:
26.56M
Differed Income Tax :
- 7083.00K
Stock Based Compensation :
8.43M
Change in Working Capital :
1.41M
Accounts Receivables:
- 81628.00K
Other Working Capital:
-
Other Non-Cash Items:
18.91M
Net Cash Provided by Operating Activities:
285.89M
Investments in PP&E:
-
Net Acquisitions:
-
Purchases of Investments:
- 746855.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
4.66B
6.73B
11.39B
-
-
-
-
198.39M
465.70M
-
10.34B
-
-
11.00B
73.24B
62.24B
-
109.66M
-
-
-
109.66M
226.85M
-
226.85M
56.66B
56.54B
168.00K
4.86B
- 394925.0K
-
March 31, 2022 at 6:00:00 AM
-
5.70B
62.24B
17.06B
336.50M
- 4328323.0K
565.69M
- 1501353.00K
- 1682514.00K
- 175360.00K
-
- 18597.00K
- 58900.00K
1.58B
1.33B
807.00K
- 64235.00K
3.85B
3.91B
285.89M
-
285.89M
Our Proprietary Portfolio Rating
Our Rating:
A+
Price Forecast/Expected Price in Next 5 Years of
EWBC
2023
2024
2025
2026
2027
$77.98
$128.36
$141.26
$155.47
$171.10