Why Westamerica Bancorporation (NASDAQ:WABC) Could Be Worth Watching
Westamerica Bancorporation (NASDAQ:WABC), operating in the financial services industry based in United States, had a relatively subdued couple of weeks in terms of changes in share price, which continued to float around the range of $59.26 to $64.26. However, is this the true valuation level 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.
View our latest analysis for Westamerica Bancorporation
Is Westamerica Bancorporation still cheap?
Westamerica Bancorporation appears to be overvalued by 45.98% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$60.03 on the market compared to my intrinsic value of $41.12. This means that the opportunity to buy Westamerica Bancorporation at a good price has disappeared! Furthermore, Westamerica Bancorporation’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.
What kind of growth will Westamerica Bancorporation generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of Westamerica Bancorporation, it is expected to deliver a relatively unexciting earnings growth of 5.7%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for Westamerica Bancorporation, at least in the near term.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in WABC’s future 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 tabs on WABC for some time, 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 positive outlook 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
