East West Bancorp (EWBC) AI Stock Analysis

• Market Cap: $12.50B
• Dividend Yield: 2.4%
• Average Volume (3M): 964.78K
• Price to Earnings (P/E): 10.8
• Beta (1Y): 1.22
• Revenue Growth: 13.84%
• EPS Growth: 2.04%
• Country: US
• Employees: 3,206
• Sector: Financial
• Sector Strength: 93
• Industry: Banking
• EPS (TTM): 8.33
• Shares Outstanding: 138,439,820
• 10 Day Avg. Volume: 1,013,995
• 30 Day Avg. Volume: 964,777
• PEG Ratio: 5.31
• Price to Book (P/B): N/A
• Price to Sales (P/S): 5.31
• Price to Cash Flow (P/CF): 6.50
• P/FCF Ratio: 3.70
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $117.67
• Price Target Upside: 30.31% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 9

East West Bancorp shows strong profitability and strategic growth plans, reflected in record earnings and positive earnings call sentiment. However, operational challenges and bearish technical indicators pose risks. Valuation metrics indicate the stock might be undervalued, offering potential upside if operational issues are managed effectively.

Positive Factors

Financial performance

NII results have consistently exceeded estimates, indicating strong financial performance.

Valuation

The stock is trading at an unwarranted discount to the peer median, indicating potential upside.

Negative Factors

Earnings

Adjusted EPS of $2.08 missed MS/consensus estimates of $2.17/$2.11 on higher provisions and expenses.

East West Bancorp Business Overview & Revenue Model

Company Description

East West Bancorp, Inc. (EWBC) is a publicly traded bank holding company headquartered in Pasadena, California. It operates through its principal subsidiary, East West Bank, which provides a full range of banking services to consumer and commercial customers. The company primarily serves the United States, with a focus on the Chinese-American community, and has a presence in key markets such as California, New York, and China. East West Bancorp offers products and services including business and personal banking, wealth management, and international banking services.

How the Company Makes Money

East West Bancorp generates revenue primarily through the interest income from its lending operations, which include commercial loans, residential mortgage loans, and consumer loans. The company also earns money from non-interest income sources such as fees and service charges related to deposit accounts, wealth management services, and international banking transactions. Additionally, East West Bancorp benefits from its strategic positioning in cross-border banking, leveraging its expertise and network to facilitate trade and investment flows between the United States and Greater China, which significantly contributes to its earnings. Key revenue factors include net interest margin, loan portfolio growth, and fee-based income.

East West Bancorp Financial Statement Overview

Summary

East West Bancorp displays strong overall financial health with notable revenue growth and profitability margins. The balance sheet is stable with prudent leverage management, though a high percentage of liabilities to assets suggests cautious monitoring is required. Cash flow remains strong, underpinning the company's ability to generate and manage liquidity effectively. The combination of solid growth, profitability, and cash generation positions the company favorably within the banking industry, although vigilance towards leverage and sustainability of revenue growth is advisable.

Income Statement

East West Bancorp demonstrates robust profitability with a gross profit margin of 66.77% and a net profit margin of 25.16% for TTM (Trailing-Twelve-Months). Revenue growth from the previous year shows a significant increase of 87.06%, indicating strong business performance. EBIT and EBITDA margins remain solid at 36.24% and 28.65%, respectively, evidencing efficient operations. However, the steep revenue increase may not be sustainable long-term, posing a potential risk.

Balance Sheet

The company maintains a moderate debt-to-equity ratio of 0.47, indicating a balanced leverage position. The return on equity is impressive at 14.50% for TTM (Trailing-Twelve-Months), reflecting effective use of equity capital. The equity ratio stands at 10.29%, suggesting a stable financial base, though slightly low for a banking institution. This stability is somewhat offset by a higher liability percentage of 89.71% of total assets, highlighting potential leverage risks.

Cash Flow

East West Bancorp's cash flow analysis reveals a positive trajectory, with operating cash flow to net income ratio of 1.33, indicating strong cash generation capabilities. Free cash flow has increased by 3.90% from the previous period, showcasing growth in liquidity. The free cash flow to net income ratio is 1.33, underlining efficient conversion of income into cash flow, crucial for sustaining growth and investments.

Breakdown
TTM	Dec 2023	Dec 2022	Dec 2021	Dec 2020	Dec 2019
Income Statement		Total Revenue
4.42B	2.36B	2.32B	1.80B	1.60B	1.66B
	Gross Profit
2.95B	3.97B	2.32B	1.80B	1.60B	1.66B
	EBIT
1.60B	1.75B	1.69B	1.06B	685.76M	843.92M
	EBITDA
1.27B	1.62B	1.57B	1.21B	805.67M	988.10M
	Net Income Common Stockholders
1.11B	1.16B	1.13B	872.98M	567.80M	674.03M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
4.61B	4.61B	9.66B	14.61B	10.37B	6.77B
	Total Assets
69.61B	69.61B	64.11B	60.87B	52.16B	44.20B
	Total Debt
4.76B	4.76B	264.33M	506.86M	928.19M	1.03B
	Net Debt
140.38M	140.38M	-3.36B	-4.14B	-3.90B	-2.42B
	Total Liabilities
62.66B	62.66B	58.13B	55.03B	46.89B	39.18B
	Stockholders Equity
6.95B	6.95B	5.98B	5.84B	5.27B	5.02B
Cash Flow		Free Cash Flow
1.48B	1.42B	2.07B	1.16B	690.67M	725.97M
	Operating Cash Flow
1.48B	1.42B	2.07B	1.17B	693.33M	735.83M
	Investing Cash Flow
-6.14B	-4.25B	-4.58B	-9.12B	-6.85B	-2.57B
	Financing Cash Flow
4.94B	3.96B	2.11B	7.84B	6.91B	2.12B

East West Bancorp Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 90.30
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Positive
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EWBC, the sentiment is Negative. The current price of 90.3 is below the 20-day moving average (MA) of 96.82, below the 50-day MA of 97.61, and above the 200-day MA of 87.65, indicating a neutral trend. The MACD of -1.96 indicates Positive momentum. The RSI at 29.10 is Positive, neither overbought nor oversold. The STOCH value of 24.37 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for EWBC.

East West Bancorp Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FITB	72 Outperform	$28.93B	13.86	11.78%	3.34%	11.21%	-2.26%
PNC	71 Outperform	$75.95B	13.97	10.82%	3.35%	7.24%	7.51%
ZION	69 Neutral	$7.99B	10.91	12.80%	3.17%	7.91%	13.79%
EWBC	68 Neutral	$12.50B	10.84	15.09%	2.40%	13.84%	2.04%
Sector *	64 Neutral	$14.34B	10.61	9.28%	4.07%	18.04%	-9.54%
CMA	63 Neutral	$8.45B	12.85	10.67%	4.41%	-6.54%	-21.90%
KEY	51 Neutral	$19.14B	1,663.64	>-0.01%	4.83%	-11.11%	-133.79%

East West Bancorp Corporate Events

East West Bancorp Reports Record Income and Dividend Increase

On January 23, 2025, East West Bancorp announced a record net income of $1.2 billion for the full year 2024, with diluted earnings per share of $8.33. The company reported significant growth in deposits, reflecting strong customer relationships, and a 12% increase in fee income. East West Bancorp also revealed an additional $300 million share repurchase authorization and a 9% increase in its common stock dividend, showcasing its robust capital base and profitability. The announcement highlights the company’s commitment to supporting communities affected by wildfires in Southern California and its continued dedication to serving its clients.