Financial Comparison: Cullen/Frost Bankers (NYSE:CFR) vs. Westamerica Bancorporation (WABC)

Westamerica Bancorporation (NASDAQ: WABC) and Cullen/Frost Bankers (NYSE:CFR) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, analyst recommendations, earnings, institutional ownership, dividends, valuation and risk.

Volatility and Risk

Westamerica Bancorporation has a beta of 1.1, meaning that its share price is 10% more volatile than the S&P 500. Comparatively, Cullen/Frost Bankers has a beta of 1.35, meaning that its share price is 35% more volatile than the S&P 500.

Institutional & Insider Ownership

83.6% of Westamerica Bancorporation shares are held by institutional investors. Comparatively, 80.6% of Cullen/Frost Bankers shares are held by institutional investors. 4.9% of Westamerica Bancorporation shares are held by insiders. Comparatively, 5.2% of Cullen/Frost Bankers shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

Westamerica Bancorporation pays an annual dividend of $1.56 per share and has a dividend yield of 2.6%. Cullen/Frost Bankers pays an annual dividend of $2.28 per share and has a dividend yield of 2.2%. Westamerica Bancorporation pays out 67.8% of its earnings in the form of a dividend. Cullen/Frost Bankers pays out 44.8% 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 24 consecutive years and Cullen/Frost Bankers has increased its dividend for 4 consecutive years. Westamerica Bancorporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent ratings and price targets for Westamerica Bancorporation and Cullen/Frost Bankers, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Westamerica Bancorporation 0 2 0 0 2.00
Cullen/Frost Bankers 1 12 2 0 2.07

Westamerica Bancorporation presently has a consensus target price of $56.00, suggesting a potential downside of 5.45%. Cullen/Frost Bankers has a consensus target price of $97.05, suggesting a potential downside of 4.29%. Given Cullen/Frost Bankers’ stronger consensus rating and higher possible upside, analysts plainly believe Cullen/Frost Bankers is more favorable than Westamerica Bancorporation.

Earnings & Valuation

This table compares Westamerica Bancorporation and Cullen/Frost Bankers’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Westamerica Bancorporation $183.21 million 8.50 $60.50 million $2.30 25.75
Cullen/Frost Bankers $1.13 billion 5.76 $326.93 million $5.09 19.92

Cullen/Frost Bankers has higher revenue and earnings than Westamerica Bancorporation. Cullen/Frost Bankers is trading at a lower price-to-earnings ratio than Westamerica Bancorporation, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Westamerica Bancorporation and Cullen/Frost Bankers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Westamerica Bancorporation 33.38% 10.28% 1.12%
Cullen/Frost Bankers 28.49% 11.23% 1.11%

Summary

Cullen/Frost Bankers beats Westamerica Bancorporation on 10 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 Cullen/Frost Bankers

Cullen/Frost Bankers, Inc. is a financial holding company and a bank holding company. The Company, through its subsidiaries, provides a range of products and services throughout Texas markets. The Company’s segments include Banking, Frost Wealth Advisors and Non-Banks. The Banking segment includes both commercial and consumer banking services, and Frost Insurance Agency. The Frost Wealth Advisors segment includes fee-based services within private trust, retirement services, and financial management services, including personal wealth management and securities brokerage services. The Non-Banks segment includes the direct and indirect ownership of its banking and non-banking subsidiaries and the issuance of debt and equity. It offers commercial and consumer banking services, as well as trust and investment management, insurance, brokerage, mutual funds, leasing, treasury management, capital markets advisory and item processing services.

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