Value
7.7/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 8.6 |
| P/S | 6.8 |
| Fwd P/E | 9.2 |
| PEG | 10.0 |
| Analyst target | 4.0 |
- ▸Forward P/E: 10.6x
- ▸PEG: 0.40
- ▸Attractively valued
CATY · Why this verdict
Why Cathay General Bancorp (CATY) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictHOLD
Overall score6.3/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Cathay General is an attractively valued regional bank with best-in-class margins, but the price has moved above the analyst target and commercial real estate concentration plus a fresh earnings miss limit further upside.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The loan book carries concentration risk in commercial real estate and construction loans, flagged as 1 high and 1 medium risk. Bear case | Credit costs stay contained and the commercial real estate exposure does not trigger reserve builds. | ↓Deteriorating |
| CounterCommercial real estate stress could force loan-loss provisions that overwhelm the attractive valuation. | ||
Cathay trades at a forward P/E of 10.4x with a PEG of 0.39, which the data calls attractively valued. Valuation breakdown | Earnings growth holds so the low multiple persists or expands modestly over 12 months. | →Stable |
| CounterBank multiples are low for a reason; credit stress or margin pressure could cut earnings and make the cheap multiple a value trap. | ||
Cathay posts strong margins of 43% and best-in-class margins versus peers, supporting a high-quality earnings base. Quality breakdown | Net margin stays above 35% over the next 12 months. | →Stable |
| CounterBank margins are sensitive to deposit costs and rate moves, and ROE-linked quality scores are only mediocre. | ||
The price of $64.40 is above the $58.46 analyst target, with upside of -9.2% (target reached), and sits 2.2% below the 52-week high. Upside pct | Analyst targets are revised up toward the share price, restoring positive upside. | →Stable |
| CounterStrong momentum and attractive valuation may drive target upgrades, so the price above target may not signal downside. | ||
Cathay beat estimates in 3 of the last 4 quarters but missed the latest by 10.48% (EPS $1.30 vs $1.45), with an average surprise of just 1.39%. Last 4 quarters | EPS returns to beating consensus in the next two quarters. | →Stable |
| CounterThe latest miss is the largest in the record shown and may mark the start of an earnings downtrend. | ||
The loan book carries concentration risk in commercial real estate and construction loans, flagged as 1 high and 1 medium risk.
↓DeterioratingBear case
- Expectation
- Credit costs stay contained and the commercial real estate exposure does not trigger reserve builds.
CounterCommercial real estate stress could force loan-loss provisions that overwhelm the attractive valuation.
Cathay trades at a forward P/E of 10.4x with a PEG of 0.39, which the data calls attractively valued.
→StableValuation breakdown
- Expectation
- Earnings growth holds so the low multiple persists or expands modestly over 12 months.
CounterBank multiples are low for a reason; credit stress or margin pressure could cut earnings and make the cheap multiple a value trap.
Cathay posts strong margins of 43% and best-in-class margins versus peers, supporting a high-quality earnings base.
→StableQuality breakdown
- Expectation
- Net margin stays above 35% over the next 12 months.
CounterBank margins are sensitive to deposit costs and rate moves, and ROE-linked quality scores are only mediocre.
The price of $64.40 is above the $58.46 analyst target, with upside of -9.2% (target reached), and sits 2.2% below the 52-week high.
→StableUpside pct
- Expectation
- Analyst targets are revised up toward the share price, restoring positive upside.
CounterStrong momentum and attractive valuation may drive target upgrades, so the price above target may not signal downside.
Cathay beat estimates in 3 of the last 4 quarters but missed the latest by 10.48% (EPS $1.30 vs $1.45), with an average surprise of just 1.39%.
→StableLast 4 quarters
- Expectation
- EPS returns to beating consensus in the next two quarters.
CounterThe latest miss is the largest in the record shown and may mark the start of an earnings downtrend.
Per-dimension breakdown
Quality
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 4.1 |
| ROA | 1.0 |
| Gross margin | 0.0 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Moat | 5.9 |
| Piotroski F | 7.8 |
- ▸Strong margins: 43%
- ▸Strong Piotroski F-Score: 7/9
Growth
7.9/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 8.6 |
| EPS growth | 7.3 |
- ▸Strong growth: 24% YoY
Momentum
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.1 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 2.5 |
- ▸Overbought (RSI 79)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 5.5 |
| erm sentiment | 5.0 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.0 |
- ▸Insider selling (low materiality) — $475,972 (0.011% of mkt cap)
Peer rank
5.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.1 |
| quality rank | 7.5 |
| growth rank | 7.7 |
- ▸Best-in-class margins
Technical
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.2 |
| support resistance | 1.7 |
| 52w position | 9.6 |
Risk (lower is worse)
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.1 |
| days to cover | 3.3 |
| volatility | 6.6 |
| put call | 10.0 |
| implied vol | 4.7 |
| beta | 7.7 |
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 3.2 |
| dividend safety | 5.5 |
- ▸Strong earnings: 3B/1M
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLDPassed (6)
- MOMENTUM:7.1>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:79d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-1.0=NEGATIVE
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.96
Upside
-10.0%
Downside
10.3%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $4.4B<$5B
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:7.1>=5.5. Top dim: Growth at 7.9; weakest: Technical at 4.5. No conviction either direction.
The strongest dimensions are Growth at 7.9, Value at 7.7, and Momentum at 7.1; the weakest are Technical at 4.5, Insider at 5.0, and Catalyst at 5.1. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -0.96 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Attractive Bank Valuation
Trip ifForward P/E exceeds 14x from the current 10.4x without earnings growth.
- P2Best In Class Margins
Trip ifNet margin falls below 30% from the current level above 40%.
- P3Commercial Real Estate Concentration
Trip ifCommercial real estate loans share exceeds 50% of the total loan portfolio.
- P4Target Reached Limited Upside
Trip ifDownside to the stop level exceeds 15% while the price stays above the analyst target.
- P5Mixed Earnings Record
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.