UBS Group (NYSE:UBS) and Westamerica Bancorporation (NASDAQ:WABC) Critical Analysis

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

Earnings and Valuation

This table compares UBS Group and Westamerica Bancorporation’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
UBS Group	$65.28 billion	1.45	$27.85 billion	$9.18	3.21
Westamerica Bancorporation	$327.54 million	3.84	$161.77 million	$5.92	7.97

UBS Group has higher revenue and earnings than Westamerica Bancorporation. UBS Group 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 UBS Group and Westamerica Bancorporation’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
UBS Group	39.78%	7.78%	0.40%
Westamerica Bancorporation	48.35%	21.99%	2.42%

Dividends

UBS Group pays an annual dividend of $0.23 per share and has a dividend yield of 0.8%. Westamerica Bancorporation pays an annual dividend of $1.76 per share and has a dividend yield of 3.7%. UBS Group pays out 2.5% of its earnings in the form of a dividend. Westamerica Bancorporation pays out 29.7% 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 32 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 held by institutional investors. 1.0% of UBS Group shares are held by company insiders. Comparatively, 4.4% of Westamerica Bancorporation shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent ratings and target prices for UBS Group and Westamerica Bancorporation, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
UBS Group	0	3	3	0	2.50
Westamerica Bancorporation	0	2	0	0	2.00

Westamerica Bancorporation has a consensus price target of $53.50, indicating a potential upside of 13.59%. Given Westamerica Bancorporation’s higher probable upside, analysts plainly believe Westamerica Bancorporation is more favorable than UBS Group.

Volatility and Risk

UBS Group has a beta of 1.16, meaning that its share price is 16% more volatile than the S&P 500. Comparatively, Westamerica Bancorporation has a beta of 0.56, meaning that its share price is 44% less volatile than the S&P 500.

Summary

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

About UBS Group

UBS Group AG provides financial advice and solutions to private, institutional, and corporate clients worldwide. It operates through five divisions: Global Wealth Management, Personal & Corporate Banking, Asset Management, Investment Bank, and Non-core and Legacy. The company offers investment advice, estate and wealth planning, investing, corporate and banking, and investment management, as well as mortgage, securities-based, and structured lending solutions. It also provides personal banking products and services, such as deposits, credit and debit cards, and online and mobile banking, as well as lending, investments, retirement, and wealth management services; and corporate and institutional solutions, including equity and debt capital markets, syndicated and structured credit, private placements, leasing, traditional financing, and transaction banking solutions for payment and cash management services, trade and export finance, and global custody solutions. In addition, the company offers equities, fixed income, hedge funds, real estate and private markets, indexed and alternative beta strategies, asset allocation and currency investment strategies, customized multi-asset solutions, advisory and fiduciary services, and multi-manager hedge fund solutions and advisory services. Further, it advises clients on strategic business opportunities and helps them raise capital to fund their activities; enables its clients to buy, sell, and finance securities on capital markets and to manage their risks and liquidity; distributes, trades in, finances, and clears cash equities and equity-linked products; structures, originates, and distributes new equity and equity-linked issues; and originates, distributes, manages risk, and provides liquidity in foreign exchange, rates, credit and precious metals. The company was formerly known as UBS AG and changed its name to UBS Group AG in December 2014. UBS Group AG was founded in 1862 and is headquartered in Zurich, Switzerland.

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.