Value
8.0/10data confidence 50%| Component | Sub-score |
|---|---|
| P/E | 8.3 |
| P/S | 6.5 |
| Fwd P/E | 8.4 |
- ▸Forward P/E: 13.9x
- ▸Attractively valued
WABC · Why this verdict
Why Westamerica Bancorporation (WABC) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.1/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue has declined by 7% year-over-year, which is a significant negative for a regional bank where top-line growth is necessary to absorb operating costs and fund loan growth; this creates a structural headwind to sustaining the current earnings level. Growth breakdown | Revenue growth turns positive on a year-over-year basis in at least 2 of the next 4 quarters. | →Stable |
| CounterThe bank may be managing intentional balance sheet contraction as a risk management strategy; revenue decline paired with margin expansion can sometimes reflect deliberate quality improvement. | ||
Westamerica has beaten EPS estimates in all 4 of the last 4 quarters, with each quarter delivering approximately $1.12 in actual earnings versus consensus estimates near $1.07, reflecting a remarkably consistent quarterly delivery that is rare for a community bank. Earnings | The beat streak extends to at least 6 consecutive quarters with average EPS surprise remaining above 3%. | →Stable |
| CounterSteady beats at a small community bank often reflect conservative guidance discipline rather than earnings power; if interest rate conditions shift unfavorably, even modest guidance may become unreachable. | ||
Westamerica's net margin of 44% ranks best in class among regional bank peers, reflecting an extremely efficient operating model for a bank of its size, which supports the quality of its earnings even as revenue contracts. Quality breakdown | Net margin remains above 35% on a trailing 12-month basis over the next 12 months. | →Stable |
| CounterThe high net margin exists partly because of the bank's asset-sensitive balance sheet that benefited from rising rates; as rates normalize or decline, margin compression could rapidly erode this advantage. | ||
The stock has formed a golden cross and trades within 2.3% of its 52-week high on strong momentum indicators including a rising on-balance-volume and a bullish MACD, but the reward-to-risk ratio is only 0.07 at current prices. Momentum breakdown | The stock clears its 52-week high and sustains price above $60 for at least 30 days, or a pullback creates a better entry with reward-to-risk above 1.5. | →Stable |
| CounterStocks sitting at 52-week highs with negative asymmetry often consolidate or pull back as sellers take profits near the resistance level. | ||
Revenue has declined by 7% year-over-year, which is a significant negative for a regional bank where top-line growth is necessary to absorb operating costs and fund loan growth; this creates a structural headwind to sustaining the current earnings level.
→StableGrowth breakdown
- Expectation
- Revenue growth turns positive on a year-over-year basis in at least 2 of the next 4 quarters.
CounterThe bank may be managing intentional balance sheet contraction as a risk management strategy; revenue decline paired with margin expansion can sometimes reflect deliberate quality improvement.
Westamerica has beaten EPS estimates in all 4 of the last 4 quarters, with each quarter delivering approximately $1.12 in actual earnings versus consensus estimates near $1.07, reflecting a remarkably consistent quarterly delivery that is rare for a community bank.
→StableEarnings
- Expectation
- The beat streak extends to at least 6 consecutive quarters with average EPS surprise remaining above 3%.
CounterSteady beats at a small community bank often reflect conservative guidance discipline rather than earnings power; if interest rate conditions shift unfavorably, even modest guidance may become unreachable.
Westamerica's net margin of 44% ranks best in class among regional bank peers, reflecting an extremely efficient operating model for a bank of its size, which supports the quality of its earnings even as revenue contracts.
→StableQuality breakdown
- Expectation
- Net margin remains above 35% on a trailing 12-month basis over the next 12 months.
CounterThe high net margin exists partly because of the bank's asset-sensitive balance sheet that benefited from rising rates; as rates normalize or decline, margin compression could rapidly erode this advantage.
The stock has formed a golden cross and trades within 2.3% of its 52-week high on strong momentum indicators including a rising on-balance-volume and a bullish MACD, but the reward-to-risk ratio is only 0.07 at current prices.
→StableMomentum breakdown
- Expectation
- The stock clears its 52-week high and sustains price above $60 for at least 30 days, or a pullback creates a better entry with reward-to-risk above 1.5.
CounterStocks sitting at 52-week highs with negative asymmetry often consolidate or pull back as sellers take profits near the resistance level.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Westamerica Bancorporation has produced a perfect 4-for-4 earnings beat streak with consistent EPS surprises near 5%, and trades at a forward P/E of 13.4x with best-in-class net margins of 44%, though revenue is declining at -7% annually and the stock sits near its 52-week high with negative asymmetry.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 4.2 |
| ROA | 1.3 |
| Gross margin | 0.0 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Moat | 4.1 |
| Piotroski F | 4.4 |
- ▸Strong margins: 44%
- ▸No competitive moat
Growth
1.1/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 0.8 |
| EPS growth | 1.4 |
- ▸Declining revenue: -7%
Momentum
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 7.6 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 1.9 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 4.6 |
| erm sentiment | 5.0 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Negligible insider selling — $37,579 (0.003% of mkt cap)
Peer rank
4.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.0 |
| quality rank | 8.2 |
| growth rank | 0.4 |
- ▸Best-in-class margins
Technical
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.5 |
| support resistance | 1.7 |
| 52w position | 9.7 |
Risk (lower is worse)
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.8 |
| days to cover | 6.5 |
| volatility | 7.5 |
| put call | 10.0 |
| implied vol | 4.3 |
| beta | 9.7 |
Catalyst
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 5.0 |
| dividend safety | 4.8 |
- ▸Perfect beat streak: 4Q
- ▸Earnings in 13 days
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- MOMENTUM:6.7>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-2.1=NEGATIVE
Warning (1)
- EARNINGS_PROXIMITY:13d<=14d (soft)
Reward-to-Risk
-2.07
Upside
-17.2%
Downside
8.3%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 67, MACD bullish
EdgeCatalyst-Driven — Earnings in 13d with 4/4 beat streak
SuitabilityAggressive — MCap $1.4B<$5B
Investment implication
The F-path SELL output reflects an overall score of 5.1 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Value at 8.0) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-2.1=NEGATIVE) reinforce the read. Current asymmetry R:R is -2.07 — supplementary context, not the trigger for this path.
The strongest dimensions are Value at 8.0, Risk (lower is worse) at 7.6, and Momentum at 6.7; the weakest are Growth at 1.1, Peer rank at 4.2, and Technical at 4.3. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -2.07 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Perfect Earnings Beat Consistency
Trip ifEPS falls below $1.00 in at least 1 of the next 4 quarters, breaking the consistent delivery pattern.
- P2Best In Class Net Margin
Trip ifNet margin falls below 35%, indicating more than a 9-point compression from the current 44%.
- P3Revenue Decline Growth Concern
Trip ifRevenue declines by more than 10% year-over-year in 2 or more of the next 4 quarters.
- P4Breakout Near 52 Week High
Trip ifPrice drops below $52, more than 10% below the current $57.64, signaling the breakout has failed.