WABC
Westamerica Bancorporation
$58.35
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 39.7% below fair value
You pay
$58.35
Bear
$63.16
Fair
$96.71
Bull
$116.85
Bear
$63.16
+8.2%
ROTCE 10.7% → 2.01x TBV
Fair
$96.71
+65.7%
ROTCE 14.3% → 3.09x TBV
Bull
$116.85
+100.3%
ROTCE 16.5% → 3.73x TBV
Key Value Driver
ROTCE (14.3%) vs. cost of equity (7.3%)
Implied Market Multiple
1.69x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $57.00 from 8 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $96.71 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Dividend-based valuation: $36.81 (65% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $57.00 (from 8 analysts). Our estimate is 87% above the consensus -- consider that gap carefully.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly