WABC
Westamerica Bancorporation
$61.28
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 43.9% below fair value
You pay
$61.28
Bear
$71.36
Fair
$109.28
Bull
$132.03
Bear
$71.36
+16.5%
ROTCE 10.7% → 2.03x TBV
Fair
$109.28
+78.3%
ROTCE 14.3% → 3.11x TBV
Bull
$132.03
+115.5%
ROTCE 16.5% → 3.76x TBV
Adjust Assumptions
14.3%
7.3%
Key Value Driver
ROTCE (14.3%) vs. cost of equity (7.3%)
Implied Market Multiple
1.74x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (8 analysts)
$57.00
Divergence from AlphaVal
92%
Summary
With ROTCE of 14.3% vs. 7.3% cost of equity, fair P/TBV is 3.11x on $35.13 tangible book, implying $109.28 per share. DDM cross-check: $38.16.
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: $38.16 (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 92% 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