Waterstone Financial (WSBF) AI Stock Analysis

• Market Cap: $328.09M
• Dividend Yield: 3.59%
• Average Volume (3M): 44.40K
• Price to Earnings (P/E): 11.2
• Beta (1Y): 0.62
• Revenue Growth: -0.09%
• EPS Growth: 83.67%
• Country: US
• Employees: 600
• Sector: Financial
• Sector Strength: 70
• Industry: Banks - Regional
• EPS (TTM): 0.44
• Shares Outstanding: 18,359,930
• 10 Day Avg. Volume: 62,806
• 30 Day Avg. Volume: 44,399
• PEG Ratio: 0.24
• Price to Book (P/B): 0.84
• Price to Sales (P/S): 1.46
• P/FCF Ratio: 175.40
• Enterprise Value/Market Cap: 2.05
• Enterprise Value/Revenue: 3.34
• Enterprise Value/Gross Profit: 4.69
• Enterprise Value/Ebitda: 20.12
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 62 Neutral
• Price Target: $19.50 ▲(14.57% Upside)
• Action: Reiterated Date: 02/27/26
• Date: Action: Reiterated 02/27/26

The score is held back primarily by financial risk factors—especially highly inconsistent cash flow and elevated leverage—despite improving profitability. Technicals add support with an uptrend and positive momentum signals, while valuation is reasonable with a modest P/E and a solid dividend yield.

Positive Factors

Improving Profitability

Sustained margin expansion indicates stronger core earning power from lending and fee businesses. Higher net and operating margins increase internally generated earnings, supporting reinvestment, reserves and capital returns without relying solely on asset growth, improving medium-term financial resilience.

Reduced Leverage & Rising ROE

An improving leverage ratio and higher return on equity reflect balance-sheet repair and more efficient capital use. Lower leverage increases financial flexibility, strengthens loss-absorption capacity, and enhances ability to support lending or dividend policy through the credit cycle over the next several quarters.

Stable regional banking franchise

A core business centered on deposit gathering and residential mortgage lending produces recurring net interest income and fee streams. That focused regional banking model fosters stable customer relationships and predictable loan origination/deposit flows, underpinning durable core revenue generation.

Negative Factors

Extreme cash flow volatility

Large year-to-year swings in operating and free cash flow materially weaken predictability of internal funding for lending, dividends and capital expenditures. The ~96% drop highlights reliance on volatile items and increases probability of external financing or balance-sheet adjustments under stress.

Elevated leverage remains

Despite improvement, a debt-to-equity near 1.18 is still high for a regional bank and constrains balance-sheet flexibility. Persistent elevated leverage amplifies vulnerability to deposit or funding shocks, limits cushion for credit losses, and restricts capacity for risk‑weighted growth without adding capital.

Earnings sensitive to rate/credit cycle

Material swings in revenue and margins tied to the rate and credit cycle create unpredictable earnings power. That cyclicality complicates multi-quarter planning, makes provisioning and capital allocation harder, and increases the risk that profitability will revert during adverse macro or credit conditions.

Waterstone Financial Business Overview & Revenue Model

Company Description

Waterstone Financial, Inc. operates as a bank holding company for WaterStone Bank SSB that provides various financial services to customers in southeastern Wisconsin, the United States. It operates in two segments, Community Banking and Mortgage Banking. The Community Banking segment offers consumer and business banking products and services, such as deposit and transactional solutions, including checking accounts, online banking and bill pay services, money transfer services, as well as credit, debit, and pre-paid cards; investable funds solutions comprising savings, money market deposits, individual retirement accounts, and certificates of deposit; residential mortgages, home equity loans and lines of credit, personal and installment loans, real estate financing, business loans, and business lines of credit; and fixed and variable annuities, insurance products, and trust and investment management accounts. It also provides transaction deposits, interest bearing transaction accounts, demand deposits, non-interest-bearing demand accounts, and time deposits; secured and unsecured lines; commercial real estate construction loans; term loans for working capital, inventory, and general corporate use; and personal term loans and investment services. The Mortgage Banking segment offers residential mortgage loans for the purpose of sale in the secondary market. The company also invests in a portfolio of securities include mortgage-backed securities, government-sponsored and private-label enterprise bonds, collateralized mortgage and municipal obligations, and other debt securities. It operates 14 full-service banking offices, 1 drive-through office, and 14 automated teller machines located in Milwaukee, Washington, and Waukesha Counties, Wisconsin. The company was formerly known as Wauwatosa Holdings, Inc. and changed its name to Waterstone Financial, Inc. in August 2008. Waterstone Financial, Inc. was founded in 1921 and is based in Wauwatosa, Wisconsin.

How the Company Makes Money

Waterstone Financial generates revenue primarily through interest income from loans and mortgages, as well as fees from various banking services. The company earns interest by lending funds to customers at higher rates than it pays on deposits. Additionally, WSBF collects fees for account maintenance, transaction services, and other banking products. The company may also engage in investment activities and earn income from its investment portfolio. Strategic partnerships with other financial institutions and community organizations can further enhance its service offerings and customer base, contributing to overall revenue growth.

Waterstone Financial Financial Statement Overview

Summary

Profitability has rebounded with modest revenue growth and stronger margins in 2024–2025, but the balance sheet remains leveraged (debt-to-equity ~1.18) and cash flow is the key weakness, with extreme volatility and a sharp drop in 2025 operating/free cash flow (~$1.7M vs. ~$47.0M in 2024).

Income Statement

Revenue has stabilized and returned to modest growth (2025 up ~3.5% vs. 2024), and profitability has improved meaningfully since 2023, with net margin rising to ~13.1% in 2025 (from ~9.4% in 2024 and ~5.3% in 2023). Operating profitability also strengthened (EBIT margin ~16.6% in 2025). The main offset is the longer-term earnings power volatility: revenue and margins were materially higher in 2020–2021, then reset lower in 2022–2024, suggesting sensitivity to the rate/credit cycle typical for regional banks.

Balance Sheet

Leverage remains elevated with debt-to-equity around ~1.18 in 2025 (improved from ~1.32 in 2024, but still high), which reduces balance-sheet flexibility. Equity has been relatively stable (~$349M in 2025 vs. ~$339M in 2024), and returns on equity improved to ~7.6% in 2025 (from ~5.5% in 2024 and ~2.7% in 2023), but are still below the stronger levels seen in 2020–2021. Overall: improving trend, but leverage and mid-level returns keep the balance sheet score moderate.

Cash Flow

Cash generation is the weakest area due to extreme volatility. Operating cash flow and free cash flow fell sharply to about $1.7M in 2025 (down ~96% vs. 2024’s ~$47.0M) after already swinging from negative in 2023 to very strong in 2022. While free cash flow has generally tracked reported earnings in most years, the magnitude of year-to-year swings raises concerns about consistency and the underlying drivers of cash generation.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	201.61M	199.38M	176.97M	171.06M	268.47M
Gross Profit	143.63M	132.55M	127.32M	156.80M	258.09M
EBITDA	33.45M	26.48M	14.33M	28.51M	98.16M
Net Income	26.40M	18.69M	9.38M	19.49M	70.79M
Balance Sheet
Total Assets	2.26B	2.21B	2.21B	2.03B	2.22B
Cash, Cash Equivalents and Short-Term Investments	294.41M	191.24M	235.84M	232.55M	541.76M
Total Debt	412.26M	446.52M	466.05M	386.78M	477.13M
Total Liabilities	1.91B	1.87B	1.87B	1.66B	1.78B
Stockholders Equity	349.39M	339.13M	344.06M	370.49M	432.77M
Cash Flow
Free Cash Flow	1.68M	46.96M	-28.28M	205.96M	141.23M
Operating Cash Flow	1.68M	48.06M	-27.58M	206.66M	142.01M
Investing Cash Flow	-3.58M	-23.96M	-159.22M	-335.74M	160.06M
Financing Cash Flow	-1.24M	-20.76M	176.58M	-201.00M	-20.12M

Waterstone Financial Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 17.02
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WSBF, the sentiment is Neutral. The current price of 17.02 is below the 20-day moving average (MA) of 17.96, below the 50-day MA of 17.52, and above the 200-day MA of 15.15, indicating a neutral trend. The MACD of 0.05 indicates Positive momentum. The RSI at 45.61 is Neutral, neither overbought nor oversold. The STOCH value of 28.48 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for WSBF.

Waterstone Financial Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FNLC	77 Outperform	$319.30M	8.51	11.86%	5.24%	10.46%	18.70%
FSBW	75 Outperform	$305.02M	9.28	10.77%	3.17%	4.43%	-12.94%
PLBC	73 Outperform	$356.47M	9.72	12.34%	2.63%	11.98%	-10.12%
PCB	72 Outperform	$319.58M	8.21	9.38%	3.57%	10.93%	42.68%
CZFS	71 Outperform	$303.86M	7.48	10.88%	3.38%	2.16%	24.43%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
WSBF	62 Neutral	$328.09M	11.18	6.95%	3.59%	-0.09%	83.67%