Financial Analysis: Associated Banc (NYSE:ASB) versus Ames National (NASDAQ:ATLO)

Associated Banc (NYSE:ASB) and Ames National (NASDAQ:ATLO) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their profitability, institutional ownership, risk, valuation, analyst recommendations, dividends and earnings.

Risk and Volatility

Associated Banc has a beta of 0.79, meaning that its stock price is 21% less volatile than the S&P 500. Comparatively, Ames National has a beta of 0.3, meaning that its stock price is 70% less volatile than the S&P 500.

Institutional & Insider Ownership

83.0% of Associated Banc shares are owned by institutional investors. Comparatively, 26.5% of Ames National shares are owned by institutional investors. 0.7% of Associated Banc shares are owned by insiders. Comparatively, 2.3% of Ames National shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Associated Banc pays an annual dividend of $0.96 per share and has a dividend yield of 3.4%. Ames National pays an annual dividend of $0.96 per share and has a dividend yield of 3.4%. Associated Banc pays out 33.3% of its earnings in the form of a dividend. Ames National pays out 44.9% 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. Associated Banc has raised its dividend for 13 consecutive years. Associated Banc is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Associated Banc and Ames National, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Associated Banc	0	6	6	0	2.50
Ames National	0	2	1	0	2.33

Associated Banc currently has a consensus price target of $30.30, suggesting a potential upside of 6.16%. Ames National has a consensus price target of $31.00, suggesting a potential upside of 8.35%. Given Ames National’s higher probable upside, analysts clearly believe Ames National is more favorable than Associated Banc.

Profitability

This table compares Associated Banc and Ames National’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Associated Banc	19.88%	10.46%	1.10%
Ames National	19.36%	9.70%	0.89%

Valuation & Earnings

This table compares Associated Banc and Ames National”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Associated Banc	$2.46 billion	1.93	$474.78 million	$2.88	9.91
Ames National	$98.26 million	2.58	$19.03 million	$2.14	13.37

Associated Banc has higher revenue and earnings than Ames National. Associated Banc is trading at a lower price-to-earnings ratio than Ames National, indicating that it is currently the more affordable of the two stocks.

Summary

Associated Banc beats Ames National on 13 of the 17 factors compared between the two stocks.

About Associated Banc

Associated Banc-Corp, a bank holding company, provides various banking and nonbanking products to individuals and businesses in Wisconsin, Illinois, and Minnesota. The company offers lending solutions, including commercial loans and lines of credit, commercial real estate financing, construction loans, letters of credit, leasing, asset based lending and equipment finance, loan syndications products, residential mortgages, home equity loans and lines of credit, personal and installment loans, auto finance and business loans, and business lines of credit. It also provides deposit and cash management solutions, such as commercial checking and interest-bearing deposit products, cash vault and night depository services, liquidity solutions, payables and receivables solutions, and information services; specialized financial services, such as interest rate risk management and foreign exchange solutions; fiduciary services, such as administration of pension, profit-sharing and other employee benefit plans, fiduciary and corporate agency services, and institutional asset management services; and investable funds solutions, including savings, money market deposit accounts, IRA accounts, CDs, fixed and variable annuities, full-service, discount, and online investment brokerage; investment advisory services; and trust and investment management accounts. In addition, the company offers deposit and transactional solutions, including checking, credit, debit and pre-paid cards, online banking and bill pay; and money transfer services. Associated Banc-Corp was founded in 1861 and is headquartered in Green Bay, Wisconsin.

About Ames National

Ames National Corporation operates as a multi-bank holding company that provides banking products and services primarily in Boone, Clarke, Hancock, Marshall, Polk, Story, and Union counties in central, north central, and south-central Iowa. The company accepts various deposit products, including checking and savings accounts; and time deposits, such as money market accounts and certificates of deposit. It also provides loans, such as short-term and medium-term commercial and agricultural real estate, residential real estate loans, equipment, vehicle, and home improvement loans; consumer loans to finance consumer purchases, such as automobiles, trucks, recreational vehicles, household furnishings, boats, personal loans, and lines of credit; agricultural and business operating loans and lines of credit; and originates mortgage loans for sale into the secondary market. In addition, the company offers cash management, merchant credit card processing, safe deposit box, wire transfer, direct deposit, and automated/video teller machine access services; and automatic drafts for various accounts, as well as wealth management services. Further, it provides farm management, investment, and custodial services for individuals, businesses, and non-profit organizations; and online, mobile, and private banking services. Ames National Corporation was incorporated in 1903 and is headquartered in Ames, Iowa.