Reviewing German American Bancorp (NASDAQ:GABC) and Ames National (NASDAQ:ATLO)

Ames National (NASDAQ:ATLO) and German American Bancorp (NASDAQ:GABC) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, profitability, risk, institutional ownership, analyst recommendations, earnings and dividends.

Insider and Institutional Ownership

26.5% of Ames National shares are held by institutional investors. Comparatively, 46.9% of German American Bancorp shares are held by institutional investors. 2.3% of Ames National shares are held by company insiders. Comparatively, 3.2% of German American Bancorp shares are held 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.

Analyst Recommendations

This is a summary of current ratings and price targets for Ames National and German American Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ames National	0	1	1	1	3.00
German American Bancorp	0	2	2	1	2.80

Ames National presently has a consensus price target of $31.00, indicating a potential downside of 8.66%. German American Bancorp has a consensus price target of $53.33, indicating a potential upside of 7.06%. Given German American Bancorp’s higher probable upside, analysts plainly believe German American Bancorp is more favorable than Ames National.

Dividends

Ames National pays an annual dividend of $0.96 per share and has a dividend yield of 2.8%. German American Bancorp pays an annual dividend of $1.24 per share and has a dividend yield of 2.5%. Ames National pays out 33.4% of its earnings in the form of a dividend. German American Bancorp pays out 32.0% 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. German American Bancorp has increased its dividend for 13 consecutive years.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Ames National	24.44%	12.15%	1.19%
German American Bancorp	28.78%	12.33%	1.74%

Volatility and Risk

Ames National has a beta of 0.31, indicating that its stock price is 69% less volatile than the S&P 500. Comparatively, German American Bancorp has a beta of 0.61, indicating that its stock price is 39% less volatile than the S&P 500.

Valuation & Earnings

This table compares Ames National and German American Bancorp”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ames National	$72.56 million	4.14	$19.03 million	$2.87	11.83
German American Bancorp	$487.40 million	3.84	$112.64 million	$3.88	12.84

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

Summary

German American Bancorp beats Ames National on 14 of the 17 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 German American Bancorp

German American Bancorp, Inc. operates as a financial holding company for German American Bank that provides retail and commercial banking services. The company operates through three segments: Core Banking, Wealth Management Services, and Insurance Operations. The Core Banking segment accepts deposits from the general public; and originates consumer, commercial and agricultural, commercial and agricultural real estate, and residential mortgage loans, as well as sells residential mortgage loans in the secondary market. The Wealth Management segment provides trust, investment advisory, brokerage, and retirement planning services. The Insurance Operations segment offers a range of personal and corporate property and casualty insurance products. It also offers checking, saving, and individual retirement accounts; certificates of deposit; wire transfer; credit cards; home equity, mortgages, and small business; treasury management; and online and mobile banking, bill pay, digital wallet, mobile check deposit, credit score and report, money management, and estatements, as well as wealth advisory. German American Bancorp, Inc. was founded in 1910 and is based in Jasper, Indiana.