Analyzing Alerus Financial (NASDAQ:ALRS) and Capital One Financial (NYSE:COF)

Capital One Financial (NYSE:COF) and Alerus Financial (NASDAQ:ALRS) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, risk, profitability, dividends, valuation, institutional ownership and earnings.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Capital One Financial	10.19%	9.74%	1.15%
Alerus Financial	3.54%	8.20%	0.76%

Analyst Recommendations

This is a summary of current ratings and price targets for Capital One Financial and Alerus Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Capital One Financial	2	11	6	0	2.21
Alerus Financial	0	2	0	0	2.00

Capital One Financial currently has a consensus target price of $138.50, suggesting a potential downside of 2.75%. Alerus Financial has a consensus target price of $23.50, suggesting a potential upside of 17.74%. Given Alerus Financial’s higher probable upside, analysts clearly believe Alerus Financial is more favorable than Capital One Financial.

Insider and Institutional Ownership

89.8% of Capital One Financial shares are owned by institutional investors. Comparatively, 51.3% of Alerus Financial shares are owned by institutional investors. 1.3% of Capital One Financial shares are owned by company insiders. Comparatively, 5.6% of Alerus Financial shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Risk and Volatility

Capital One Financial has a beta of 1.46, suggesting that its stock price is 46% more volatile than the S&P 500. Comparatively, Alerus Financial has a beta of 0.67, suggesting that its stock price is 33% less volatile than the S&P 500.

Valuation & Earnings

This table compares Capital One Financial and Alerus Financial’s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Capital One Financial	$49.48 billion	1.09	$4.89 billion	$12.77	11.15
Alerus Financial	$164.85 million	2.39	$11.70 million	$0.49	40.73

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

Dividends

Capital One Financial pays an annual dividend of $2.40 per share and has a dividend yield of 1.7%. Alerus Financial pays an annual dividend of $0.76 per share and has a dividend yield of 3.8%. Capital One Financial pays out 18.8% of its earnings in the form of a dividend. Alerus Financial pays out 155.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Alerus Financial has increased its dividend for 3 consecutive years. Alerus Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Capital One Financial beats Alerus Financial on 11 of the 17 factors compared between the two stocks.

About Capital One Financial

Capital One Financial Corporation operates as the financial services holding company for the Capital One, National Association, which engages in the provision of various financial products and services in the United States, Canada, and the United Kingdom. It operates through three segments: Credit Card, Consumer Banking, and Commercial Banking. The company accepts checking accounts, money market deposits, negotiable order of withdrawals, savings deposits, and time deposits. Its loan products include credit card loans; auto and retail banking loans; and commercial and multifamily real estate, and commercial and industrial loans. The company also offers credit and debit card products; online direct banking services; and provides advisory, capital markets, treasury management, and depository services. It serves consumers, small businesses, and commercial clients through digital channels, branches, cafés, and other distribution channels located in New York, Louisiana, Texas, Maryland, Virginia, New Jersey, and California. The company was founded in 1988 and is headquartered in McLean, Virginia.

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.