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Westamerica Remains Underperform - Analyst Blog
On Jul 9, 2013, we reiterated our long-term recommendation on
) at Underperform. Our decision rests on Westamerica's mounting
Westamerica's net interest margin (NIM) has been declining over the last several quarters due to the challenging economic environment. Moreover, sluggish economic recovery and the Federal Reserve's decision to keep short-term interest rates low through mid-2015 are expected to keep NIM under pressure going forward.
Further, Westamerica's interest earnings assets have remained a matter of concern due to the weak interest rates and low investment returns amid a sluggish economic recovery.
Also, Westamerica has been continuously experiencing pressure on its credit quality, which is anticipated to increase in the upcoming quarters due to the prevailing weak macroeconomic environment. Further, Westamerica's securities portfolio has historically remained higher than its peers, which is expected to adversely affect the quality of earnings.
For Westamerica, the Zacks Consensus Estimate for 2013 has gone down 1.9% to $2.58 per share over the last 90 days. Likewise, the Zacks Consensus Estimate for 2014 has declined 2.3% to $2.56 per share over the same time frame. With the Zacks Consensus Estimates for both 2013 and 2014 going down, Westamerica currently carries a Zacks Rank #3 (Hold).
Westamerica is scheduled to announce its second-quarter results on Jul 16. The Zacks Consensus Estimate for the quarter is pegged at 64 cents per share.
Other Stocks Worth Considering
Some stocks that are performing well include Central Pacific Financial Corp . ( CPF ), Preferred Bank ( PFBC ) and TriCo Bancshares ( TCBK ). All these carry a Zacks Rank #1 (Strong Buy).
CENTRAL PAC FIN (CPF): Free Stock Analysis Report
PREFERRED BANK (PFBC): Free Stock Analysis Report
TRICO BANCSHRS (TCBK): Free Stock Analysis Report
WESTAMER BANCP (WABC): Free Stock Analysis Report
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