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NEW YORK ( TheStreet) -- Westamerica Bancorp (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 and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, premium valuation and deteriorating net income.

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Highlights from the ratings report include:
  • The gross profit margin for WESTAMERICA BANCORPORATION is currently very high, coming in at 96.09%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 31.52% significantly outperformed against the industry average.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 11.5%. Since the same quarter one year prior, revenues fell by 11.3%. 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 9.4% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, WESTAMERICA BANCORPORATION reported lower earnings of $2.51 versus $2.93 in the prior year. For the next year, the market is expecting a contraction of 5.2% in earnings ($2.38 versus $2.51).

Westamerica Bancorporation operates as the bank holding company for Westamerica Bank that provides a range of banking services to corporate and individual customers. The company has a P/E ratio of 20.5, above the S&P 500 P/E ratio of 17.7. Westamerica has a market cap of $1.32 billion and is part of the financial sector and banking industry. Shares are down 11.5% year to date as of the close of trading on Tuesday.

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

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