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 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, premium valuation and feeble growth in the company's earnings per share. Highlights from the ratings report include:
- Net operating cash flow has slightly increased to $32.96 million or 1.43% when compared to the same quarter last year. Despite an increase in cash flow of 1.43%, WESTAMERICA BANCORPORATION is still growing at a significantly lower rate than the industry average of 829.30%.
- Despite the weak revenue results, WABC has outperformed against the industry average of 30.7%. 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.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, WABC has underperformed the S&P 500 Index, declining 8.94% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
-- Written by a member of TheStreet Ratings Staff