Financial Review: Westamerica Bancorporation (NASDAQ:WABC) and Peoples Financial Services (NASDAQ:PFIS)

Westamerica Bancorporation (NASDAQ:WABC) and Peoples Financial Services (NASDAQ:PFIS) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, institutional ownership, dividends, risk, analyst recommendations, earnings and valuation.

Insider and Institutional Ownership

81.9% of Westamerica Bancorporation shares are held by institutional investors. Comparatively, 31.7% of Peoples Financial Services shares are held by institutional investors. 5.9% of Westamerica Bancorporation shares are held by company insiders. Comparatively, 8.2% of Peoples Financial Services shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Westamerica Bancorporation and Peoples Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Westamerica Bancorporation	41.71%	12.31%	1.88%
Peoples Financial Services	20.66%	17.27%	1.70%

Valuation and Earnings

This table compares Westamerica Bancorporation and Peoples Financial Services”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Westamerica Bancorporation	$271.77 million	5.05	$116.17 million	$4.54	13.08
Peoples Financial Services	$283.67 million	2.52	$59.19 million	$8.83	8.07

Westamerica Bancorporation has higher earnings, but lower revenue than Peoples Financial Services. Peoples Financial Services is trading at a lower price-to-earnings ratio than Westamerica Bancorporation, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Westamerica Bancorporation has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500. Comparatively, Peoples Financial Services has a beta of 0.74, suggesting that its stock price is 26% less volatile than the S&P 500.

Dividends

Westamerica Bancorporation pays an annual dividend of $1.92 per share and has a dividend yield of 3.2%. Peoples Financial Services pays an annual dividend of $2.50 per share and has a dividend yield of 3.5%. Westamerica Bancorporation pays out 42.3% of its earnings in the form of a dividend. Peoples Financial Services pays out 28.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Westamerica Bancorporation has increased its dividend for 34 consecutive years and Peoples Financial Services has increased its dividend for 8 consecutive years. Peoples Financial Services is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of current ratings and price targets for Westamerica Bancorporation and Peoples Financial Services, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Westamerica Bancorporation	0	2	0	0	2.00
Peoples Financial Services	0	2	1	0	2.33

Westamerica Bancorporation currently has a consensus price target of $64.00, indicating a potential upside of 7.74%. Peoples Financial Services has a consensus price target of $65.50, indicating a potential downside of 8.13%. Given Westamerica Bancorporation’s higher possible upside, equities analysts clearly believe Westamerica Bancorporation is more favorable than Peoples Financial Services.

Summary

Peoples Financial Services beats Westamerica Bancorporation on 9 of the 17 factors compared between the two stocks.

About Westamerica Bancorporation

Westamerica Bancorporation operates as a bank holding company for the Westamerica Bank that provides various banking products and services to individual and commercial customers. The company accepts various deposit products, including retail savings and checking accounts, as well as certificates of deposit. Its loan portfolio includes commercial, commercial and residential real estate, real estate construction, and consumer installment loans, as well as indirect automobile loans. The company was formerly known as Independent Bankshares Corporation and changed its name to Westamerica Bancorporation in 1983. The company was founded in 1884 and is headquartered in San Rafael, California.

About Peoples Financial Services

Peoples Financial Services Corp. operates as the bank holding company for Peoples Security Bank and Trust Company that provides various commercial and retail banking services. The company accepts money market, negotiable order of withdrawal, savings, individual retirement, demand deposit, and certificates of deposit accounts. It also provides residential real estate, automobile, manufactured housing, personal, and home equity loans; and commercial real estate, working capital, construction, small business administration, and agricultural loans, as well as loans for equipment and other commercial needs, and mineral rights. In addition, the company offers fiduciary and investment services; investment management, IRA trustee, estate administration, living and life insurance trust, trustee under will, guardianship, custodial/IRA custodial, and corporate trust services, as well as pension and profit-sharing plans. Further, it provides wealth management products and services comprising investment portfolio management, estate and business succession planning, annuities, insurance, retirement plan, and tax planning, as well as education funding strategies; and securities, brokerage, and investor services. Additionally, the company offers small business checking and merchant money market accounts, online and telephone banking, business credit cards, merchant line of credit, and financial checkup services; and remote deposit capture, automatic clearing house transaction, cash management, automated teller machine, point of sale transaction, safe deposit box, night depository, direct deposit, and official check services. It serves business, non-profit, governmental, municipal agency, and professional customers, as well as retail customers. Peoples Financial Services Corp. was founded in 1905 and is headquartered in Scranton, Pennsylvania.