Reviewing Community Financial System (NYSE:CBU) & Westamerica Bancorporation (NASDAQ:WABC)

Westamerica Bancorporation (NASDAQ:WABC) and Community Financial System (NYSE:CBU) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, dividends, valuation, analyst recommendations, earnings, risk and institutional ownership.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Westamerica Bancorporation and Community Financial System, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Westamerica Bancorporation	0	1	1	0	2.50
Community Financial System	0	4	1	1	2.50

Westamerica Bancorporation presently has a consensus target price of $65.00, suggesting a potential upside of 8.99%. Community Financial System has a consensus target price of $69.25, suggesting a potential upside of 7.49%. Given Westamerica Bancorporation’s higher probable upside, equities analysts plainly believe Westamerica Bancorporation is more favorable than Community Financial System.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Westamerica Bancorporation	41.63%	12.80%	1.89%
Community Financial System	22.05%	11.78%	1.36%

Earnings & Valuation

This table compares Westamerica Bancorporation and Community Financial System”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Westamerica Bancorporation	$271.77 million	5.07	$116.17 million	$4.64	12.85
Community Financial System	$1.01 billion	3.34	$210.46 million	$4.43	14.54

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

Dividends

Westamerica Bancorporation pays an annual dividend of $1.92 per share and has a dividend yield of 3.2%. Community Financial System pays an annual dividend of $1.96 per share and has a dividend yield of 3.0%. Westamerica Bancorporation pays out 41.4% of its earnings in the form of a dividend. Community Financial System pays out 44.2% 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 raised its dividend for 34 consecutive years and Community Financial System has raised its dividend for 33 consecutive years. Westamerica Bancorporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

81.9% of Westamerica Bancorporation shares are owned by institutional investors. Comparatively, 73.8% of Community Financial System shares are owned by institutional investors. 5.9% of Westamerica Bancorporation shares are owned by company insiders. Comparatively, 1.1% of Community Financial System shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Volatility and Risk

Westamerica Bancorporation has a beta of 0.58, meaning that its share price is 42% less volatile than the S&P 500. Comparatively, Community Financial System has a beta of 0.75, meaning that its share price is 25% less volatile than the S&P 500.

Summary

Westamerica Bancorporation beats Community Financial System on 11 of the 16 factors compared between the two stocks.

About Westamerica Bancorporation

Westamerica Bancorporation is a bank holding company headquartered in San Rafael, California. Its principal subsidiary, Westamerica Bank, provides banking services to individuals, businesses and public entities. The bank offers deposit accounts, certificates of deposit, commercial and consumer loans, and digital banking services. It also provides businesses with cash-management and other banking services. Westamerica Bank serves communities in Northern and Central California, including the San Francisco Bay Area and the Sacramento and Central Valleys.

About Community Financial System

Community Financial System, Inc. is a diversified financial services company headquartered in DeWitt, New York. Its principal subsidiary, Community Bank, N.A., provides personal and business banking services, including deposit accounts, lending, and cash management. The company also offers retirement plan administration and employee benefits services, insurance brokerage, and wealth management and investment advisory services through its specialized subsidiaries. Through its banking network, Community Financial System serves customers in New York, Pennsylvania, Vermont, and Massachusetts.