Westamerica Bancorporation (NASDAQ: WABC) and Guaranty Federal Bancshares (NASDAQ:GFED) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, dividends, earnings, analyst recommendations, profitability, institutional ownership and risk.
Westamerica Bancorporation pays an annual dividend of $1.60 per share and has a dividend yield of 2.7%. Guaranty Federal Bancshares pays an annual dividend of $0.48 per share and has a dividend yield of 2.1%. Westamerica Bancorporation pays out 84.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Guaranty Federal Bancshares pays out 39.3% of its earnings in the form of a dividend. Westamerica Bancorporation has increased its dividend for 5 consecutive years. Westamerica Bancorporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This table compares Westamerica Bancorporation and Guaranty Federal Bancshares’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Guaranty Federal Bancshares||15.44%||8.82%||0.86%|
Risk and Volatility
Westamerica Bancorporation has a beta of 1, indicating that its share price has a similar volatility profile to the S&P 500.Comparatively, Guaranty Federal Bancshares has a beta of 0.17, indicating that its share price is 83% less volatile than the S&P 500.
Insider and Institutional Ownership
85.6% of Westamerica Bancorporation shares are held by institutional investors. Comparatively, 26.3% of Guaranty Federal Bancshares shares are held by institutional investors. 4.5% of Westamerica Bancorporation shares are held by insiders. Comparatively, 10.0% of Guaranty Federal Bancshares shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
Earnings and Valuation
This table compares Westamerica Bancorporation and Guaranty Federal Bancshares’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Westamerica Bancorporation||$190.46 million||8.21||$50.02 million||$1.90||30.97|
|Guaranty Federal Bancshares||$35.17 million||2.85||$5.43 million||$1.22||18.73|
Westamerica Bancorporation has higher revenue and earnings than Guaranty Federal Bancshares. Guaranty Federal Bancshares is trading at a lower price-to-earnings ratio than Westamerica Bancorporation, indicating that it is currently the more affordable of the two stocks.
This is a summary of recent ratings and price targets for Westamerica Bancorporation and Guaranty Federal Bancshares, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Guaranty Federal Bancshares||0||0||1||0||3.00|
Westamerica Bancorporation presently has a consensus target price of $54.67, suggesting a potential downside of 7.09%. Guaranty Federal Bancshares has a consensus target price of $25.00, suggesting a potential upside of 9.41%. Given Guaranty Federal Bancshares’ stronger consensus rating and higher probable upside, analysts clearly believe Guaranty Federal Bancshares is more favorable than Westamerica Bancorporation.
Westamerica Bancorporation beats Guaranty Federal Bancshares on 12 of the 17 factors compared between the two stocks.
About Westamerica Bancorporation
Westamerica Bancorporation is a bank holding company. The Company provides a range of banking services to individual and corporate customers in Northern and Central California through its subsidiary bank, Westamerica Bank. The communities served are located in Northern and Central California, from Mendocino, Lake and Nevada Counties in the north to Kern County in the south. It provides a range of loans, including commercial loans, commercial real estate loans, construction loans, residential real estate loans, and consumer installment and other loans. It maintains a securities portfolio consisting of securities issued by the United States Treasury, United States Government sponsored entities, agency and non-agency mortgage backed securities (MBS), non-agency commercial MBS, agency residential collateralized mortgage obligations (CMO), non-agency residential CMO, obligations of states and political subdivisions, asset-backed securities, corporate securities and other securities.
About Guaranty Federal Bancshares
Guaranty Federal Bancshares, Inc. is the savings and loan holding company for Guaranty Federal Savings Bank (the Bank). The Company operates through banking operation segment. The banking segment is engaged in the business of originating mortgage loans secured by one- to four-family residences, multi-family, construction, commercial and consumer loans. The Bank’s primary market areas are Greene and Christian Counties, which are in the southwestern corner of Missouri, and includes the cities of Springfield, Nixa and Ozark, and Missouri. The Bank’s loan portfolio consists of mortgage loans, including one- to four-family loans, multi-family loans, construction loans and commercial real estate loans; commercial business loans, and consumer loans. The Bank invests in mortgage-backed securities, the United States Government and federal agency securities, and other marketable securities. The Company owns Guaranty Statutory Trust I and Guaranty Statutory Trust II.
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