Analyzing Westamerica Bancorporation (NASDAQ:WABC) & Meridian (NASDAQ:MRBK)

Westamerica Bancorporation (NASDAQ:WABC) and Meridian (NASDAQ:MRBK) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, valuation, profitability, analyst recommendations, dividends, institutional ownership and risk.

Risk and Volatility

Westamerica Bancorporation has a beta of 0.54, suggesting that its stock price is 46% less volatile than the S&P 500. Comparatively, Meridian has a beta of 0.74, suggesting that its stock price is 26% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Westamerica Bancorporation and Meridian, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Westamerica Bancorporation	0	3	0	0	2.00
Meridian	0	1	1	0	2.50

Westamerica Bancorporation presently has a consensus price target of $57.00, suggesting a potential downside of 0.05%. Meridian has a consensus price target of $16.00, suggesting a potential upside of 12.44%. Given Meridian’s stronger consensus rating and higher probable upside, analysts plainly believe Meridian is more favorable than Westamerica Bancorporation.

Dividends

Westamerica Bancorporation pays an annual dividend of $1.76 per share and has a dividend yield of 3.1%. Meridian pays an annual dividend of $0.50 per share and has a dividend yield of 3.5%. Westamerica Bancorporation pays out 32.1% of its earnings in the form of a dividend. Meridian pays out 49.5% 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 32 consecutive years.

Profitability

This table compares Westamerica Bancorporation and Meridian’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Westamerica Bancorporation	45.73%	17.67%	2.30%
Meridian	6.00%	6.99%	0.49%

Institutional and Insider Ownership

81.9% of Westamerica Bancorporation shares are owned by institutional investors. Comparatively, 58.6% of Meridian shares are owned by institutional investors. 4.4% of Westamerica Bancorporation shares are owned by insiders. Comparatively, 14.0% of Meridian shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Westamerica Bancorporation and Meridian”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Westamerica Bancorporation	$304.55 million	5.00	$161.77 million	$5.49	10.39
Meridian	$168.55 million	0.95	$13.24 million	$1.01	14.09

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

Summary

Westamerica Bancorporation beats Meridian on 10 of the 17 factors compared between the two stocks.

About Westamerica Bancorporation

Westamerica Bancorporation operates as a bank holding company for the Westamerica Bank that provides various banking products and services to individual and commercial customers. The company accepts various deposit products, including retail savings and checking accounts, as well as certificates of deposit. Its loan portfolio includes commercial, commercial and residential real estate, real estate construction, and consumer installment loans, as well as indirect automobile loans. The company was formerly known as Independent Bankshares Corporation and changed its name to Westamerica Bancorporation in 1983. The company was founded in 1884 and is headquartered in San Rafael, California.

About Meridian

Meridian Corporation operates as the holding company for Meridian Bank that provides commercial banking products and services in Pennsylvania, New Jersey, Delaware, Florida, and Maryland. The company offers various deposit products, such as demand non-interest bearing, demand interest bearing, savings accounts, money market accounts, and time deposits. It also provides commercial and industrial loans comprising business lines of credit, term loans, small business lending, lease financing, shared national credits, and other financing; commercial real estate, and land development and construction loans for residential and commercial projects; and consumer and home equity lending, private banking, merchant, and title and land settlement services. In addition, the company operates and originates mortgage loans for 1-4 family dwellings; and offers real estate holding, investment advisory, and equipment leasing services, as well as financial planning and wealth management services. Meridian Corporation was incorporated in 2004 and is headquartered in Malvern, Pennsylvania.