NEW YORK (TheStreet) -- Westamerica (Nasdaq:WABC) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its expanding profit margins, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.
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- The gross profit margin for WESTAMERICA BANCORPORATION is currently very high, coming in at 93.10%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 33.40% is above that of the industry average.
- Net operating cash flow has slightly increased to $32.96 million or 1.43% when compared to the same quarter last year. In addition, WESTAMERICA BANCORPORATION has also vastly surpassed the industry average cash flow growth rate of -54.32%.
- Despite the weak revenue results, WABC has outperformed against the industry average of 25.2%. Since the same quarter one year prior, revenues slightly dropped by 6.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Commercial Banks industry and the overall market, WESTAMERICA BANCORPORATION's return on equity exceeds that of both the industry average and the S&P 500.
- The change in net income from the same quarter one year ago has significantly exceeded that of the Commercial Banks industry average, but is less than that of the S&P 500. The net income has decreased by 6.2% when compared to the same quarter one year ago, dropping from $22.38 million to $21.01 million.
-- Written by a member of TheStreet Ratings Staff
TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
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