West Bancorporation (NASDAQ:WTBA) & HomeStreet (NASDAQ:HMST) Critical Analysis

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

Valuation & Earnings

This table compares West Bancorporation and HomeStreet”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
West Bancorporation	$198.50 million	1.58	$24.05 million	$1.70	10.87
HomeStreet	$358.19 million	0.68	-$144.34 million	($7.40)	-1.74

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

Risk & Volatility

West Bancorporation has a beta of 0.92, suggesting that its stock price is 8% less volatile than the S&P 500. Comparatively, HomeStreet has a beta of 1.38, suggesting that its stock price is 38% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings for West Bancorporation and HomeStreet, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
West Bancorporation	0	1	0	0	2.00
HomeStreet	0	2	2	0	2.50

West Bancorporation currently has a consensus price target of $20.50, suggesting a potential upside of 10.93%. HomeStreet has a consensus price target of $14.1667, suggesting a potential upside of 9.90%. Given West Bancorporation’s higher possible upside, equities research analysts clearly believe West Bancorporation is more favorable than HomeStreet.

Institutional and Insider Ownership

44.3% of West Bancorporation shares are held by institutional investors. Comparatively, 74.7% of HomeStreet shares are held by institutional investors. 4.6% of West Bancorporation shares are held by company insiders. Comparatively, 4.6% of HomeStreet shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
West Bancorporation	14.40%	12.26%	0.72%
HomeStreet	-42.54%	-3.92%	-0.21%

Summary

West Bancorporation beats HomeStreet on 8 of the 14 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 HomeStreet

HomeStreet, Inc. operates as the bank holding company for HomeStreet Bank that provides commercial, mortgage, and consumer/retail banking services in the Western United States. The company offers personal and business checking, savings, interest-bearing negotiable order of withdrawal, and money market accounts, as well as certificates of deposit; credit cards; insurance; and treasury management services. Its loan products include commercial real estate (CRE), multifamily, construction and land development, owner occupied CRE and commercial business loans; and single family, home equity, and other loans. In addition, the company offers online, mobile, and telephone banking. It serves small and medium sized businesses, real estate investors, professional firms, and individuals. The company operates through branches and ATMs. The company was formerly known as Continental Mortgage and Loan Company. HomeStreet, Inc. was incorporated in 1921 and is headquartered in Seattle, Washington.