Critical Comparison: WSFS Financial (NASDAQ:WSFS) versus West Bancorporation (NASDAQ:WTBA)

West Bancorporation (NASDAQ:WTBA) and WSFS Financial (NASDAQ:WSFS) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their earnings, profitability, risk, valuation, analyst recommendations, institutional ownership and dividends.

Dividends

West Bancorporation pays an annual dividend of $1.00 per share and has a dividend yield of 4.2%. WSFS Financial pays an annual dividend of $0.68 per share and has a dividend yield of 1.2%. West Bancorporation pays out 52.6% of its earnings in the form of a dividend. WSFS Financial pays out 14.0% 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. WSFS Financial has raised its dividend for 1 consecutive years.

Analyst Ratings

This is a summary of current recommendations for West Bancorporation and WSFS Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
West Bancorporation	0	2	0	1	2.67
WSFS Financial	0	2	4	0	2.67

West Bancorporation presently has a consensus price target of $24.00, suggesting a potential upside of 0.17%. WSFS Financial has a consensus price target of $66.25, suggesting a potential upside of 15.72%. Given WSFS Financial’s higher possible upside, analysts clearly believe WSFS Financial is more favorable than West Bancorporation.

Institutional and Insider Ownership

44.3% of West Bancorporation shares are owned by institutional investors. Comparatively, 88.5% of WSFS Financial shares are owned by institutional investors. 4.6% of West Bancorporation shares are owned by insiders. Comparatively, 1.2% of WSFS Financial shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Volatility and Risk

West Bancorporation has a beta of 0.84, meaning that its stock price is 16% less volatile than the S&P 500. Comparatively, WSFS Financial has a beta of 0.83, meaning that its stock price is 17% less volatile than the S&P 500.

Profitability

This table compares West Bancorporation and WSFS Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
West Bancorporation	16.04%	13.40%	0.80%
WSFS Financial	20.44%	10.60%	1.36%

Earnings and Valuation

This table compares West Bancorporation and WSFS Financial”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
West Bancorporation	$198.50 million	2.04	$24.05 million	$1.90	12.61
WSFS Financial	$1.40 billion	2.23	$263.67 million	$4.85	11.80

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

Summary

WSFS Financial beats West Bancorporation on 11 of the 17 factors compared between the two stocks.

About West Bancorporation

West Bancorporation, Inc. operates as the financial holding company provides community banking and trust services to individuals and small- to medium-sized businesses in the United States. It offers deposit services, including checking, savings, and money market accounts, as well as time certificates of deposit. The company also provides loan products comprising commercial real estate loans, construction and land development loans, commercial lines of credit, and commercial term loans; consumer loans, including loans extended to individuals for household, family, and other personal expenditures not secured by real estate; and 1-4 family residential mortgages and home equity loans. In addition, it offers online and mobile banking, treasury management services including cash management, client-generated automated clearing house transactions, remote deposit, and fraud protection services; merchant credit card processing and corporate credit cards; and administration of estates, conservatorships, personal trusts, and agency accounts. The company was founded in 1893 and is headquartered in West Des Moines, Iowa.

About WSFS Financial

WSFS Financial Corporation operates as the savings and loan holding company for the Wilmington Savings Fund Society, FSB that provides various banking services in the United States. It operates through three segments: WSFS Bank, Cash Connect, and Wealth Management. It offers various deposit products, including savings accounts, demand deposits, interest-bearing demand deposits, money market deposit accounts, and certificates of deposit, as well as accepts jumbo certificates of deposit from individuals, businesses, and municipalities. The company also provides a range of loans, which comprise fixed and adjustable rate residential loans; commercial mortgage and commercial loans; commercial construction loans; commercial loans for working capital, financing equipment and real estate acquisitions, business expansion and other business purposes; and consumer credit products, such as home equity loans, home equity lines of credit, automobile loans, unsecured lines of credit, and other secured and unsecured personal installment loans. In addition, it offers insurance products; planning and advisory services, investment management, trust services, and credit and deposit products to individual, corporate and institutional clients; retail securities and insurance brokerage services; mortgage and title services; residential mortgage and refinancing solutions; and leases small equipment and fixed assets, as well as provides financial planning, customized investment strategies, brokerage products, fiduciary, and wealth management services. Further, the company provides ATM vault cash, smart safe, and other cash logistics services; and online reporting and ATM cash management, predictive cash ordering and reconcilement services, armored carrier management, loss protection, and deposit safe cash logistics services, as well as trustee, agency, bankruptcy administration, custodial and commercial domicile services. The company was founded in 1832 and is based in Wilmington, Delaware.