Analyzing Westamerica Bancorporation (NASDAQ:WABC) & Peoples Financial Services (NASDAQ:PFIS)

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

Profitability

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

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

Volatility and Risk

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

Institutional and Insider Ownership

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

Dividends

Peoples Financial Services pays an annual dividend of $2.50 per share and has a dividend yield of 3.5%. Westamerica Bancorporation pays an annual dividend of $1.92 per share and has a dividend yield of 3.2%. Peoples Financial Services pays out 28.3% of its earnings in the form of a dividend. Westamerica Bancorporation pays out 42.3% 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. Peoples Financial Services has increased its dividend for 8 consecutive years and Westamerica Bancorporation has increased its dividend for 34 consecutive years. Peoples Financial Services is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

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

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

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

Earnings and Valuation

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

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

Westamerica Bancorporation has lower revenue, but higher earnings 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.

Summary

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

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.

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.