Is Westamerica Bancorporation (NASDAQ:WABC) Undervalued?
Westamerica Bancorporation (NASDAQ:WABC), operating in the financial services industry based in United States, received a lot of attention from a substantial price movement on the NasdaqGS over the last few months, increasing to $61.87 at one point, and dropping to the lows of $55.81. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Westamerica Bancorporation’s current trading price of $60.03 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Westamerica Bancorporation’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for Westamerica Bancorporation
What is Westamerica Bancorporation worth?
The stock is currently trading at US$60.03 on the share market, which means it is overvalued by 90.09% compared to my intrinsic value of $31.58. Not the best news for investors looking to buy! Another thing to keep in mind is that Westamerica Bancorporation’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
Can we expect growth from Westamerica Bancorporation?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 42.24% over the next year, the near-term future seems bright for Westamerica Bancorporation. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in WABC’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe WABC should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on WABC for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for WABC, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Westamerica Bancorporation. You can find everything you need to know about Westamerica Bancorporation in the latest infographic research report. If you are no longer interested in Westamerica Bancorporation, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
