Alerus Financial (NASDAQ:ALRS – Get Free Report) and Burke & Herbert Financial Services (NASDAQ:BHRB – Get Free Report) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, risk, dividends and earnings.
Analyst Recommendations
This is a breakdown of recent recommendations for Alerus Financial and Burke & Herbert Financial Services, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Alerus Financial | 0 | 3 | 1 | 0 | 2.25 |
| Burke & Herbert Financial Services | 0 | 0 | 3 | 0 | 3.00 |
Alerus Financial presently has a consensus target price of $25.63, indicating a potential upside of 13.18%. Burke & Herbert Financial Services has a consensus target price of $71.67, indicating a potential upside of 14.52%. Given Burke & Herbert Financial Services’ stronger consensus rating and higher probable upside, analysts clearly believe Burke & Herbert Financial Services is more favorable than Alerus Financial.
Earnings and Valuation
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Alerus Financial | $336.51 million | 1.71 | $17.78 million | $1.69 | 13.40 |
| Burke & Herbert Financial Services | $330.23 million | 2.85 | $35.71 million | $6.89 | 9.08 |
Burke & Herbert Financial Services has lower revenue, but higher earnings than Alerus Financial. Burke & Herbert Financial Services is trading at a lower price-to-earnings ratio than Alerus Financial, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Alerus Financial and Burke & Herbert Financial Services’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Alerus Financial | 11.06% | 10.21% | 0.98% |
| Burke & Herbert Financial Services | 20.93% | 15.39% | 1.44% |
Institutional & Insider Ownership
51.3% of Alerus Financial shares are held by institutional investors. 4.2% of Alerus Financial shares are held by insiders. Comparatively, 10.9% of Burke & Herbert Financial Services shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
Dividends
Alerus Financial pays an annual dividend of $0.84 per share and has a dividend yield of 3.7%. Burke & Herbert Financial Services pays an annual dividend of $2.20 per share and has a dividend yield of 3.5%. Alerus Financial pays out 49.7% of its earnings in the form of a dividend. Burke & Herbert Financial Services pays out 31.9% 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. Alerus Financial has increased its dividend for 25 consecutive years and Burke & Herbert Financial Services has increased its dividend for 1 consecutive years. Alerus Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk & Volatility
Alerus Financial has a beta of 0.71, meaning that its share price is 29% less volatile than the S&P 500. Comparatively, Burke & Herbert Financial Services has a beta of 1.21, meaning that its share price is 21% more volatile than the S&P 500.
Summary
Burke & Herbert Financial Services beats Alerus Financial on 12 of the 17 factors compared between the two stocks.
About Alerus Financial
Alerus Financial Corporation operates as the bank holding company for Alerus Financial, National Association that engages in the provision of various financial services to businesses and consumers. The company operates in four segments: Banking, Mortgage, Retirement and Benefit Services, and Wealth Management. 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 in North Dakota, Minnesota, and Arizona; and retirement and benefit plans 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 Burke & Herbert Financial Services
Burke Herbert Financial Services Corp. is a bank holding company, which engages in the provision of banking products and financial services to small to medium-sized businesses, their owners and employees, professional corporations, non-profits, and individuals. It operates through the following loan portfolio segments: Commercial Real Estate, Owner-Occupied Commercial Real Estate, Acquisition, Construction, and Development, Commercial and Industrial, Single Family Residential (1-4 Units), and Consumer Non-Real Estate and Other. The Commercial Real Estate segment includes leasing of the real estate collateral or income generated from the sale of the collateral. The Owner-Occupied Commercial Real Estate segment focuses on the operations of the business that occupies the property and the value of the collateral. The Acquisition, Construction, and Development segment offers creditworthiness of the borrower, project completion within budget, sale after completion, and the value of the collateral. The Commercial and Industrial segment is involved in the operations of the business and the value of the collateral. The Single Family Residential (1-4 Units) segment provides loans for investment purpose carry risk associated with the continued creditworthiness of the borrower, the value of the collateral, and either the net operating income generated from the lease of the real estate collateral or income generated from the sale of the collateral. The Consumer Non-Real Estate and Other segment covers loans carry risk associated with the creditworthiness of the borrower and the value of the collateral. The company was founded on September 14, 2022 and is headquartered in Alexandria, VA.
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