Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. 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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- 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.