Westamerica Bancorporation (NASDAQ: WABC)

Sector: Financial Services Industry: Banks - Regional CIK: 0000311094
Market Cap 1.27 Bn
P/B 1.36
P/E 10.58
P/S 4.79
ROIC (Qtr) 11.60
Div Yield % 4.70
Rev 1y % (Qtr) -13.95
Total Debt (Qtr) 133.65 Mn
Debt/Equity (Qtr) 0.14

About

Westamerica Bancorporation, often recognized by its stock symbol WABC, operates in the banking industry, providing a wide range of financial services. With its headquarters in Fairfield, California, the company offers banking services to individuals and businesses in Northern and Central California through its subsidiary bank, Westamerica Bank. The company's primary business activities revolve around its banking operations, which include deposit-taking, lending, and other financial services. These operations are divided into several segments, each...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 125.10M provides robust 0.94x coverage of total debt 133.65M, indicating excellent debt servicing capability and financial flexibility.
  • Strong tangible asset base of 5.79B provides 43.34x coverage of total debt 133.65M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 125.10M provides strong 109.83x coverage of stock compensation 1.14M, indicating sustainable incentive practices.
  • Robust free cash flow of 122.81M exceeds capital expenditure of 2.29M by 53.70x, indicating strong organic growth funding capability.
  • Strong operating cash flow of 125.10M provides 1.74x coverage of SG&A expenses 71.73M, showing efficient operational cost management.

Bear case

  • Operating cash flow of 125.10M barely covers its investment activities of 428.16M, with a coverage ratio of 0.29, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 125.10M provides thin coverage of dividend payments of (47.22M) with a -2.65 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Retained earnings of 582.96M provide limited buffer against comprehensive income items of (99.91M), which is -5.83x, indicating elevated exposure to market risks.
  • Operating cash flow of 125.10M is outpaced by equity issuance of (78.89M) (-1.59 ratio), indicating concerning reliance on equity markets for funding operations.
  • R&D investment of 0 represents just 0x of SG&A expenses of 71.73M, indicating potential underinvestment in innovation relative to administrative overhead.

Peer comparison

Companies in the Banks - Regional
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 USB Us Bancorp \De\ 84.44 Bn 12.40 3.25 77.98 Bn
2 PNC Pnc Financial Services Group, Inc. 84.36 Bn 13.61 3.73 62.34 Bn
3 NU Nu Holdings Ltd. 81.47 Bn 32.21 5.79 4.49 Bn
4 NWG NatWest Group plc 66.53 Bn 9.88 3.05 169.04 Bn
5 TFC Truist Financial Corp 64.60 Bn 13.18 3.53 71.11 Bn
6 MTB M&T Bank Corp 32.73 Bn 12.47 3.60 14.99 Bn
7 FITB Fifth Third Bancorp 31.96 Bn 14.15 3.93 18.94 Bn
8 FCNCA First Citizens Bancshares Inc /De/ 28.98 Bn 12.78 3.26 40.00 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.13 0.14
EV to Cash from Ops. EV/CFO 5.95 7.21
EV to Debt EV to Debt 5.57 5.20
EV to EBIT EV/EBIT 4.58 14.98
EV to EBITDA EV/EBITDA 4.36 8.92
EV to Free Cash Flow [EV/FCF] EV/FCF 6.06 8.87
EV to Market Cap EV to Market Cap 0.59 1.04
EV to Revenue EV/Rev 2.81 -3.76
Price to Book Value [P/B] P/B 1.36 1.17
Price to Earnings [P/E] P/E 10.58 15.63
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 2.54 271.44
Dividend Payout Ratio % Div Payout % (Qtr) 39.20 35.28
Dividend per Basic Share Div per Share (Qtr) 1.82 0.89
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 37.56 34.52
Interest Coverage Interest Coverage 0.00 -0.05
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -70.54 -73.15
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 31.08 15.78
Dividend Growth (1y) % Div 1y % (Qtr) 3.41 5.32
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -17.99 110.93
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -19.21 38.80
EBIT Growth (1y) % EBIT 1y % (Qtr) -18.80 61.46
EBT Growth (1y) % EBT 1y % (Qtr) -18.80 61.37
EPS Growth (1y) % EPS 1y % (Qtr) -16.39 76.34
FCF Growth (1y) % FCF 1y % (Qtr) 19.85 161.72
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -12.94 14.15
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.04 0.04
Cash Payout Ratio Cash Payout (Qtr) 0.37 0.26
Cash Ratio Cash Ratio 0.00 0.00
Current Ratio Current Ratio 0.00 0.01
Debt to Equity Ratio Debt/Equity (Qtr) 0.14 0.53
Interest Cover Ratio Interest Cover Ratio 0.00 -0.05
Times Interest Earned Times Interest Earned 0.00 -0.05
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 64.50 147.97
EBIT Margin % EBIT Margin % (Qtr) 61.37 155.41
EBT Margin % EBT Margin % (Qtr) 61.37 154.66
Gross Margin % Gross Margin % (Qtr) 100.00 97.82
Net Profit Margin % Net Margin % (Qtr) 45.30 115.63