Alerus Financial (NASDAQ:ALRS) and City (NASDAQ:CHCO) Head-To-Head Contrast

Alerus Financial (NASDAQ:ALRSGet Rating) and City (NASDAQ:CHCOGet Rating) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, institutional ownership, profitability, analyst recommendations, valuation and dividends.

Earnings & Valuation

This table compares Alerus Financial and City’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 1.80 $52.68 million $2.69 9.28
City $235.11 million 5.06 $88.08 million $5.83 13.64

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

Profitability

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

Net Margins Return on Equity Return on Assets
Alerus Financial 20.86% 13.52% 1.47%
City 38.11% 13.31% 1.50%

Volatility and Risk

Alerus Financial has a beta of 0.75, indicating that its share price is 25% less volatile than the S&P 500. Comparatively, City has a beta of 0.56, indicating that its share price is 44% less volatile than the S&P 500.

Dividends

Alerus Financial pays an annual dividend of $0.64 per share and has a dividend yield of 2.6%. City pays an annual dividend of $2.40 per share and has a dividend yield of 3.0%. Alerus Financial pays out 23.8% of its earnings in the form of a dividend. City pays out 41.2% 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. City has increased its dividend for 9 consecutive years. City is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alerus Financial 0 1 0 0 2.00
City 0 0 0 0 N/A

Alerus Financial currently has a consensus price target of $29.00, indicating a potential upside of 16.14%. Given Alerus Financial’s higher possible upside, equities analysts plainly believe Alerus Financial is more favorable than City.

Institutional and Insider Ownership

39.5% of Alerus Financial shares are owned by institutional investors. Comparatively, 64.1% of City shares are owned by institutional investors. 6.9% of Alerus Financial shares are owned by insiders. Comparatively, 2.6% of City shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

City beats Alerus Financial on 9 of the 15 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 City (Get Rating)

City Holding Company operates as a holding company for City National Bank of West Virginia that provides various banking, trust and investment management, and other financial solutions in the United States. The company offers checking, savings, and money market accounts, as well as certificates of deposit and individual retirement accounts. It also provides commercial and industrial loans that consist of loans to corporate and other legal entity borrowers primarily in small to mid-size industrial and commercial companies; commercial real estate loans comprising commercial mortgages, which are secured by nonresidential and multi-family residential properties; residential real estate loans to consumers for the purchase or refinance of residence; first-priority home equity loans; consumer loans that are secured and unsecured by automobiles, boats, recreational vehicles, certificates of deposit, and other personal property; and demand deposit account overdrafts. In addition, the company offers mortgage banking services, including fixed and adjustable-rate mortgages, construction financing, land loans, production of conventional and government insured mortgages, secondary marketing, and mortgage servicing. Further, it provides deposit services for commercial customers comprising treasury management, lockbox, and other cash management services; merchant credit card services; wealth management, trust, investment, and custodial services for commercial and individual customers; and corporate trust and institutional custody, financial and estate planning, and retirement plan services, as well as automated-teller-machine, interactive-teller-machine, mobile banking, interactive voice response systems, and credit and debit card services. The company operates through a network of 94 branches and 905 full-time equivalent associates in West Virginia, Virginia, Kentucky, and Ohio. City Holding Company was founded in 1957 and is headquartered in Charleston, West Virginia.

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