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NEW YORK ( TheStreet) -- Westamerica Bancorp (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 increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

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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% is above that of the industry average.
  • Net operating cash flow has increased to $33.75 million or 49.97% when compared to the same quarter last year. In addition, WESTAMERICA BANCORPORATION has also vastly surpassed the industry average cash flow growth rate of -42.03%.
  • WABC, with its decline in revenue, slightly underperformed the industry average of 2.7%. 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.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • 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 on the basis of return on equity, WESTAMERICA BANCORPORATION has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

Westamerica Bancorporation operates as the bank holding company for Westamerica Bank that provides a range of banking services to corporate and individual customers. Westamerica has a market cap of $1.37 billion and is part of the financial sector and banking industry. Shares are down 7.2% 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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