Reviewing FS Bancorp (NASDAQ:FSBW) and Westamerica Bancorporation (NASDAQ:WABC)

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

Risk & Volatility

FS Bancorp has a beta of 0.72, meaning that its share price is 28% less volatile than the S&P 500. Comparatively, Westamerica Bancorporation has a beta of 0.61, meaning that its share price is 39% less volatile than the S&P 500.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
FS Bancorp	$206.39 million	1.46	$35.02 million	$4.10	9.75
Westamerica Bancorporation	$264.32 million	4.53	$138.64 million	$4.59	10.46

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
FS Bancorp	15.10%	10.84%	1.04%
Westamerica Bancorporation	43.19%	13.10%	2.02%

Analyst Recommendations

This is a breakdown of recent ratings for FS Bancorp and Westamerica Bancorporation, as provided by MarketBeat.

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

FS Bancorp presently has a consensus target price of $41.00, indicating a potential upside of 2.55%. Westamerica Bancorporation has a consensus target price of $52.00, indicating a potential upside of 8.33%. Given Westamerica Bancorporation’s higher possible upside, analysts plainly believe Westamerica Bancorporation is more favorable than FS Bancorp.

Dividends

FS Bancorp pays an annual dividend of $1.12 per share and has a dividend yield of 2.8%. Westamerica Bancorporation pays an annual dividend of $1.84 per share and has a dividend yield of 3.8%. FS Bancorp pays out 27.3% of its earnings in the form of a dividend. Westamerica Bancorporation pays out 40.1% 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. FS Bancorp has raised its dividend for 12 consecutive years and Westamerica Bancorporation has raised its dividend for 34 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

63.9% of FS Bancorp shares are held by institutional investors. Comparatively, 81.9% of Westamerica Bancorporation shares are held by institutional investors. 12.7% of FS Bancorp shares are held by company insiders. Comparatively, 5.3% of Westamerica Bancorporation shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Westamerica Bancorporation beats FS Bancorp on 12 of the 17 factors compared between the two stocks.

About FS Bancorp

FS Bancorp, Inc. operates as a bank holding company for 1st Security Bank of Washington that provides banking and financial services to local families, local and regional businesses, and industry niches. The company operates in two segments, Commercial and Consumer Banking; and Home Lending. It offers various deposit instruments, including checking accounts, money market deposit accounts, savings accounts, and certificates of deposit. The company provides one-to-four-family residential first mortgages, second mortgage/home equity loan products, non-mortgage commercial business loans, commercial real estate loans, and construction and development loans, as well as consumer loans, which primarily include personal lines of credit, credit cards, automobile, direct home improvement, loans on deposit, and recreational loans. It operates full bank service branches and home loan production offices in suburban communities in the greater Puget Sound area, including Snohomish, King, Pierce, Jefferson, Kitsap, Clallam, Grays Harbor, and Thurston counties; and a loan production office in the market area of the Tri-Cities. FS Bancorp, Inc. was founded in 1936 and is headquartered in Mountlake Terrace, Washington.

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.