West Bancorporation Inc (NASDAQ: WTBA)

Sector: Financial Services Industry: Banks - Regional CIK: 0001166928
Market Cap 377.50 Mn
P/B 1.48
P/E 11.71
P/S 4.11
ROIC (Qtr) 4.88
Div Yield % 5.59
Rev 1y % (Qtr) 23.06
Total Debt (Qtr) 389.08 Mn
Debt/Equity (Qtr) 1.52

About

West Bancorporation, Inc., also known as West Bank, is a financial holding company that operates within the banking industry. Its subsidiary, West Bank, is an Iowa-chartered bank headquartered in West Des Moines, Iowa, with a rich history dating back to 1893. West Bank primarily generates revenue through lending and deposit-taking activities, offering a variety of products and services to its customers. The bank's offerings include commercial, real estate, and consumer loans, as well as trust services, online banking, mobile banking, and treasury...

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Price action

Investment thesis

Bull case

  • Strong tangible asset base of 3.99B provides 10.24x coverage of total debt 389.08M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 45.44M provides strong 17.18x coverage of stock compensation 2.65M, indicating sustainable incentive practices.
  • Robust free cash flow of 39.97M exceeds capital expenditure of 5.47M by 7.30x, indicating strong organic growth funding capability.
  • Retained earnings of 291.07M represent substantial 1.14x of equity 255.13M, indicating strong internal capital generation.
  • Operating cash flow of 45.44M provides strong 3.87x coverage of operating expenses 11.74M, showing operational efficiency.

Bear case

  • Operating cash flow of 45.44M barely covers its investment activities of 69.75M, with a coverage ratio of 0.65, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 45.44M provides thin coverage of dividend payments of (16.89M) with a -2.69 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of 39.97M represents just -0.80x of debt issuance (50M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Retained earnings of 291.07M provide limited buffer against comprehensive income items of (75.41M), which is -3.86x, indicating elevated exposure to market risks.
  • R&D investment of 0 represents just 0x of SG&A expenses of 41.76M, 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 0.11 0.14
EV to Cash from Ops. EV/CFO 9.30 7.21
EV to Debt EV to Debt 1.09 5.20
EV to EBIT EV/EBIT 11.04 14.98
EV to EBITDA EV/EBITDA 9.87 8.92
EV to Free Cash Flow [EV/FCF] EV/FCF 10.57 8.87
EV to Market Cap EV to Market Cap 1.12 1.04
EV to Revenue EV/Rev 4.60 -3.76
Price to Book Value [P/B] P/B 1.48 1.17
Price to Earnings [P/E] P/E 11.71 15.63
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.91 271.44
Dividend Payout Ratio % Div Payout % (Qtr) 52.40 35.28
Dividend per Basic Share Div per Share (Qtr) 1.00 0.89
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 42.39 34.52
Interest Coverage Interest Coverage 0.00 -0.05
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 84.48 -73.15
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 47.61 15.78
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 5.32
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 50.07 110.93
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 43.59 38.80
EBIT Growth (1y) % EBIT 1y % (Qtr) 44.00 61.46
EBT Growth (1y) % EBT 1y % (Qtr) 44.00 61.37
EPS Growth (1y) % EPS 1y % (Qtr) 49.22 76.34
FCF Growth (1y) % FCF 1y % (Qtr) 3,876.62 161.72
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 19.66 14.15
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.02 0.04
Cash Payout Ratio Cash Payout (Qtr) 0.33 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) 1.52 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) 46.70 147.97
EBIT Margin % EBIT Margin % (Qtr) 41.71 155.41
EBT Margin % EBT Margin % (Qtr) 41.71 154.66
Gross Margin % Gross Margin % (Qtr) 100.00 97.82
Net Profit Margin % Net Margin % (Qtr) 35.10 115.63