Critical Contrast: Ally Financial (NYSE:ALLY) & Eagle Bancorp Montana (NASDAQ:EBMT)

Eagle Bancorp Montana (NASDAQ:EBMT – Get Rating) and Ally Financial (NYSE:ALLY – Get Rating) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their risk, institutional ownership, valuation, dividends, analyst recommendations, profitability and earnings.

Dividends

Eagle Bancorp Montana pays an annual dividend of $0.55 per share and has a dividend yield of 4.4%. Ally Financial pays an annual dividend of $1.20 per share and has a dividend yield of 4.6%. Eagle Bancorp Montana pays out 35.9% of its earnings in the form of a dividend. Ally Financial pays out 29.5% 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. Eagle Bancorp Montana has increased its dividend for 11 consecutive years and Ally Financial has increased its dividend for 6 consecutive years. Ally Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

Eagle Bancorp Montana has a beta of 0.51, meaning that its share price is 49% less volatile than the S&P 500. Comparatively, Ally Financial has a beta of 1.34, meaning that its share price is 34% more volatile than the S&P 500.

Profitability

This table compares Eagle Bancorp Montana and Ally Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Eagle Bancorp Montana	11.25%	8.37%	0.69%
Ally Financial	16.42%	14.79%	0.84%

Valuation & Earnings

This table compares Eagle Bancorp Montana and Ally Financial’s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Eagle Bancorp Montana	$99.96 million	0.99	$10.70 million	$1.53	8.10
Ally Financial	$8.43 billion	0.93	$1.71 billion	$4.07	6.42

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

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Eagle Bancorp Montana and Ally Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Eagle Bancorp Montana	0	2	1	0	2.33
Ally Financial	2	9	5	0	2.19

Eagle Bancorp Montana currently has a consensus price target of $21.00, suggesting a potential upside of 69.49%. Ally Financial has a consensus price target of $34.87, suggesting a potential upside of 33.44%. Given Eagle Bancorp Montana’s stronger consensus rating and higher probable upside, analysts clearly believe Eagle Bancorp Montana is more favorable than Ally Financial.

Insider and Institutional Ownership

32.6% of Eagle Bancorp Montana shares are owned by institutional investors. Comparatively, 90.4% of Ally Financial shares are owned by institutional investors. 6.6% of Eagle Bancorp Montana shares are owned by insiders. Comparatively, 0.7% of Ally Financial shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Summary

Ally Financial beats Eagle Bancorp Montana on 11 of the 17 factors compared between the two stocks.

About Eagle Bancorp Montana

(Get Rating)

Eagle Bancorp Montana, Inc. is a bank holding company, which engages in the provision of loan and deposit services. It focuses on residential mortgage loans, commercial real estate mortgage loans, commercial business loans, agricultural loans, and second mortgage and home equity loan products. The company was founded on August 1, 1922 and is headquartered in Helena, MT.

About Ally Financial

(Get Rating)

Ally Financial, Inc. engages in the provision of online banking, securities brokerage, and investment advisory services. It operates through the following segments: Automotive Finance Operations, Insurance Operations, Mortgage Finance Operations, Corporate Finance Operations, and Corporate and Other. The Automotive Finance Operations segment offers retail installment sales contracts, loans, and operating leases, offering term loans to dealers, financing dealer floor plans and other lines of credit to dealers, warehouse lines to automotive retailers, fleet financing, providing financing to companies and municipalities for the purchase or lease of vehicles, and vehicle-remarketing services. The Insurance Operations segment focuses on consumer financial and insurance products such as vehicle service and vehicle maintenance contracts, and guaranteed asset protection. The Mortgage Finance Operations segment includes Ally Home Mortgage (ALM) offering and bulk purchases of high-quality jumbo and low-to-moderate income mortgage loans. The Corporate Finance Operations segment provides senior secured leveraged asset-based and cash flow loans to middle-market companies, with a focus on busine