Investment Thesis
West Bancorporation demonstrates strong top-line and earnings growth (+116% revenue, +35% net income YoY) with healthy margins (22.3% net, 28.4% operating), but is severely constrained by critically low returns on equity (3.9%) and assets (0.3%), combined with alarming interest coverage (0.2x) that suggests debt service stress despite positive cash flows.
Strengths
- Exceptional revenue growth of 116% YoY with corresponding 35.4% net income growth
- Strong net profit margin (22.3%) and operating margin (28.4%) indicate operational efficiency
- Positive free cash flow generation ($12.4M) with robust 26.1% FCF margin and conservative 0.19x debt-to-equity ratio
Risks
- Critically deficient interest coverage ratio of 0.2x signals inability to cover interest expenses from operating income; unsustainable debt service position
- Severely depressed ROE (3.9%) and ROA (0.3%) far below banking industry norms (8%+ ROE), indicating poor capital deployment efficiency
- Exceptionally rapid 116% revenue growth from compressed baseline raises sustainability concerns; growth trajectory requires verification for reversion risk
Key Metrics to Watch
- Interest coverage ratio - currently at critical 0.2x; must improve above 2.5x minimum for viability
- Return on equity and return on assets trends - recovery toward 8%+ ROE and 0.8%+ ROA necessary for fundamental health
- Loan portfolio quality and charge-offs - asset quality deterioration would explain low profitability despite margin strength
Financial Metrics
Revenue
47.4M
Net Income
10.6M
EPS (Diluted)
$0.61
Free Cash Flow
12.4M
Total Assets
4.0B
Cash
362.0M
Profitability Ratios
Gross Margin
N/A
Operating Margin
28.4%
Net Margin
22.3%
ROE
3.9%
ROA
0.3%
FCF Margin
26.1%
Balance Sheet & Liquidity
Current Ratio
N/A
Quick Ratio
N/A
Debt/Equity
0.19x
Debt/Assets
93.2%
Interest Coverage
0.23x
Long-term Debt
51.5M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-04-29T15:29:28.909120 |
Data as of: 2026-03-31 |
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