NEW YORK ( TheStreet) -- Westamerica (Nasdaq: WABC) has been downgraded by TheStreet Ratings from buy to hold. 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. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income.

Highlights from the ratings report include:
  • The gross profit margin for WESTAMERICA BANCORPORATION is currently very high, coming in at 92.80%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 31.10% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 1012.54% to $29.35 million when compared to the same quarter last year. In addition, WESTAMERICA BANCORPORATION has also vastly surpassed the industry average cash flow growth rate of -37.48%.
  • WABC, with its decline in revenue, underperformed when compared the industry average of 20.7%. Since the same quarter one year prior, revenues slightly dropped by 3.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • WESTAMERICA BANCORPORATION's earnings per share declined by 7.5% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, WESTAMERICA BANCORPORATION reported lower earnings of $3.22 versus $4.15 in the prior year. For the next year, the market is expecting a contraction of 3.1% in earnings ($3.12 versus $3.22).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Commercial Banks industry. The net income has decreased by 9.7% when compared to the same quarter one year ago, dropping from $23.56 million to $21.27 million.

Westamerica Bancorporation operates as the holding company for Westamerica Bank that provides various banking services to individual and corporate customers in northern and central California. The company has a P/E ratio of 13, equal to the average banking industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Westamerica has a market cap of $1.2 billion and is part of the financial sector and banking industry. Shares are down 27% year to date as of the close of trading on Thursday.

You can view the full Westamerica Ratings Report or get investment ideas from our investment research center.
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