Financial Review: Eagle Bancorp Montana (NASDAQ:EBMT) & Ames National (NASDAQ:ATLO)

Ames National (NASDAQ:ATLO) and Eagle Bancorp Montana (NASDAQ:EBMT) are both small-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their earnings, profitability, institutional ownership, analyst recommendations, valuation, dividends and risk.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Ames National	21.63%	10.65%	1.02%
Eagle Bancorp Montana	12.16%	8.29%	0.74%

Analyst Ratings

This is a breakdown of recent ratings and price targets for Ames National and Eagle Bancorp Montana, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ames National	0	2	1	0	2.33
Eagle Bancorp Montana	0	3	1	0	2.25

Ames National currently has a consensus price target of $31.00, suggesting a potential upside of 2.01%. Eagle Bancorp Montana has a consensus price target of $23.50, suggesting a potential downside of 0.38%. Given Ames National’s stronger consensus rating and higher possible upside, equities analysts plainly believe Ames National is more favorable than Eagle Bancorp Montana.

Earnings and Valuation

This table compares Ames National and Eagle Bancorp Montana”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ames National	$98.26 million	2.74	$19.03 million	$2.42	12.56
Eagle Bancorp Montana	$127.08 million	1.48	$14.84 million	$1.98	11.91

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

Institutional and Insider Ownership

26.5% of Ames National shares are held by institutional investors. Comparatively, 35.7% of Eagle Bancorp Montana shares are held by institutional investors. 2.3% of Ames National shares are held by insiders. Comparatively, 5.8% of Eagle Bancorp Montana shares are held 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.

Risk & Volatility

Ames National has a beta of 0.3, suggesting that its stock price is 70% less volatile than the S&P 500. Comparatively, Eagle Bancorp Montana has a beta of 0.35, suggesting that its stock price is 65% less volatile than the S&P 500.

Dividends

Ames National pays an annual dividend of $0.96 per share and has a dividend yield of 3.2%. Eagle Bancorp Montana pays an annual dividend of $0.58 per share and has a dividend yield of 2.5%. Ames National pays out 39.7% of its earnings in the form of a dividend. Eagle Bancorp Montana pays out 29.3% 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 14 consecutive years.

Summary

Ames National beats Eagle Bancorp Montana on 10 of the 16 factors compared between the two stocks.

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.

About Eagle Bancorp Montana

Eagle Bancorp Montana, Inc. operates as the bank holding company for Opportunity Bank of Montana that provides various retail banking products and services to small businesses and individuals in Montana. It accepts various deposit products, such as checking, savings, money market, and individual retirement accounts, as well as certificates of deposit accounts. The company also provides 1-4 family residential mortgage loans, such as residential mortgages and construction of residential properties; commercial real estate loans, including multi-family dwellings, nonresidential property, commercial construction and development, and farmland loans; and second mortgage/home equity loans. In addition, it offers consumer loans, such as loans secured by collateral other than real estate, such as automobiles, recreational vehicles, and boats; personal loans and lines of credit; commercial business loans consisting of business loans and lines of credit on a secured and unsecured basis; construction loans; agricultural loans; and mortgage loan services. The company operates full-service branches and automated teller machines. Eagle Bancorp Montana, Inc. was founded in 1922 and is headquartered in Helena, Montana.