Reviewing Alerus Financial (NASDAQ:ALRS) & UMB Financial (NASDAQ:UMBF)

Alerus Financial (NASDAQ:ALRSGet Rating) and UMB Financial (NASDAQ:UMBFGet Rating) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, risk, dividends, profitability, institutional ownership and valuation.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Alerus Financial and UMB Financial, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alerus Financial 0 0 0 0 N/A
UMB Financial 0 1 2 0 2.67

UMB Financial has a consensus price target of $115.00, suggesting a potential upside of 22.84%. Given UMB Financial’s higher possible upside, analysts plainly believe UMB Financial is more favorable than Alerus Financial.

Volatility and Risk

Alerus Financial has a beta of 0.73, suggesting that its share price is 27% less volatile than the S&P 500. Comparatively, UMB Financial has a beta of 0.94, suggesting that its share price is 6% less volatile than the S&P 500.

Earnings & Valuation

This table compares Alerus Financial and UMB Financial’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Alerus Financial $240.04 million 1.89 $52.68 million $2.98 8.73
UMB Financial $1.34 billion 3.39 $353.02 million $7.25 12.91

UMB Financial has higher revenue and earnings than Alerus Financial. Alerus Financial is trading at a lower price-to-earnings ratio than UMB Financial, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Alerus Financial and UMB Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Alerus Financial 21.95% 15.20% 1.64%
UMB Financial 26.57% 11.52% 0.94%

Insider & Institutional Ownership

36.1% of Alerus Financial shares are owned by institutional investors. Comparatively, 86.7% of UMB Financial shares are owned by institutional investors. 6.9% of Alerus Financial shares are owned by insiders. Comparatively, 9.8% of UMB Financial shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

Alerus Financial pays an annual dividend of $0.64 per share and has a dividend yield of 2.5%. UMB Financial pays an annual dividend of $1.48 per share and has a dividend yield of 1.6%. Alerus Financial pays out 21.5% of its earnings in the form of a dividend. UMB Financial pays out 20.4% 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. UMB Financial has increased its dividend for 18 consecutive years.

Summary

UMB Financial beats Alerus Financial on 13 of the 16 factors compared between the two stocks.

About Alerus Financial (Get Rating)

Alerus Financial Corporation, through its subsidiary, Alerus Financial, National Association, provides various financial services to businesses and consumers. The company operates in four segments: Banking, Retirement and Benefit Services, Wealth Management, and Mortgage. It offers various deposit products, including demand deposits, interest-bearing transaction accounts, money market accounts, time and savings deposits, checking accounts, and certificates of deposit; and treasury management products, including electronic receivables management, remote deposit capture, cash vault services, merchant services, and other cash management services. The company also provides commercial loans, business term loans, lines of credit, and commercial real estate loans, as well as construction and land development loans; consumer lending products, including residential first mortgage loans; installment loans and lines of credit; and second mortgage loans. In addition, it offers retirement plan administration and investment advisory services, employee stock ownership plan, fiduciary services, payroll, health savings accounts, and other benefit services, as well as individual retirement accounts; and financial planning, investment management, personal and corporate trust, estate administration, and custody services. Further, the company provides debit and credit cards, online banking, mobile banking/wallet, payment, private banking, payroll accounts, flex spending accounts, administration, and government health insurance program services. It offers banking services through fourteen offices in North Dakota, Minnesota, and Arizona; and retirement and benefit plans in 50 states through offices located in Michigan, Minnesota, and Colorado. The company was formerly known as First National Bank North Dakota and changed its name to Alerus Financial Corporation in 2000. Alerus Financial Corporation was founded in 1879 and is headquartered in Grand Forks, North Dakota.

About UMB Financial (Get Rating)

UMB Financial Corporation operates as the bank holding company for the UMB Bank that provides various banking and other financial services. The Commercial Banking segment provides commercial loans and credit card; commercial real estate financing; letters of credit; loan syndication, and consultative service; various business solutions including asset-based lending, accounts receivable financing, mezzanine debt, and minority equity investment; and treasury management service, such as depository service, account reconciliation, cash management tool, accounts payable and receivable solution, electronic fund transfer and automated payment, controlled disbursement, lockbox service, and remote deposit capture service. The Institutional Banking segment offers asset management and healthcare service provided to institutional client; and fund administration and accounting, investor service and transfer agency, marketing and distribution, custody, alternative investment service, fixed income sale, trading and underwriting, and corporate trust and escrow service, as well as institutional custody service. This segment also provides healthcare payment solution includes custodial service for health saving accounts and private label, multipurpose debit cards to insurance carriers, third-party administrator, software companies, employers, and financial institutions. The Personal Banking segment offers deposit account, retail credit card, private banking, installment loan, home equity line of credit, residential mortgage, and small business loan, as well as internet banking, ATM network, private banking, brokerage and insurance service, and advisory and trust service. It operates through a network of branches and offices in the states of Missouri, Kansas, Colorado, Illinois, Oklahoma, Texas, Arizona, Nebraska, Iowa, Pennsylvania, South Dakota, Indiana, Utah, Minnesota, California, and Wisconsin. The company was founded in 1913 and is headquartered in Kansas City, Missouri.

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