WABC
Westamerica Bancorporation
$55.36
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 42.1% below fair value
You pay
$55.36
Bear
$62.43
Fair
$95.61
Bull
$115.51
Bear
$62.43
+12.8%
ROTCE 10.7% → 1.99x TBV
Fair
$95.61
+72.7%
ROTCE 14.3% → 3.05x TBV
Bull
$115.51
+108.7%
ROTCE 16.5% → 3.68x TBV
Key Value Driver
ROTCE (14.3%) vs. cost of equity (7.4%)
Implied Market Multiple
1.6x
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 $95.61 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: $36.50 (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 85% 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