Analyzing Northwest Bancshares (NASDAQ:NWBI) and Ames National (NASDAQ:ATLO)

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

Valuation and Earnings

This table compares Ames National and Northwest Bancshares’ revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ames National	$83.52 million	2.26	$10.82 million	$1.11	18.87
Northwest Bancshares	$701.74 million	2.04	$134.96 million	$1.03	10.93

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

Volatility & Risk

Ames National has a beta of 0.57, meaning that its share price is 43% less volatile than the S&P 500. Comparatively, Northwest Bancshares has a beta of 0.62, meaning that its share price is 38% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations for Ames National and Northwest Bancshares, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ames National	0	0	0	0	N/A
Northwest Bancshares	1	1	0	0	1.50

Northwest Bancshares has a consensus price target of $11.00, indicating a potential downside of 2.31%. Given Northwest Bancshares’ higher probable upside, analysts clearly believe Northwest Bancshares is more favorable than Ames National.

Insider and Institutional Ownership

26.5% of Ames National shares are held by institutional investors. Comparatively, 66.3% of Northwest Bancshares shares are held by institutional investors. 3.2% of Ames National shares are held by insiders. Comparatively, 1.0% of Northwest Bancshares shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Ames National and Northwest Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ames National	11.49%	6.27%	0.46%
Northwest Bancshares	17.84%	8.77%	0.93%

Dividends

Ames National pays an annual dividend of $1.08 per share and has a dividend yield of 5.2%. Northwest Bancshares pays an annual dividend of $0.80 per share and has a dividend yield of 7.1%. Ames National pays out 97.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Northwest Bancshares pays out 77.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ames National has raised its dividend for 14 consecutive years. Northwest Bancshares is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Northwest Bancshares beats Ames National on 10 of the 15 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 Northwest Bancshares

Northwest Bancshares, Inc. operates as the bank holding company for Northwest Bank, a state-chartered savings bank that provides personal and business banking solutions. The company accepts various deposits, including checking, savings, money market deposit, term certificate, and individual retirement accounts. It also offers loan products comprising one-to-four-family residential real estate loans, shorter term consumer loans, and loans collateralized by multi-family residential and commercial real estate; home equity loans and lines of credit; commercial business and real estate loans; commercial loans; and consumer loans, including automobile loans, sales finance loans, unsecured personal loans, credit card loans, and loans secured by investment accounts, as well as investment management and trust services. The company operates community banking locations in Pennsylvania, Western New York, Eastern Ohio, and Indiana. Northwest Bancshares, Inc. was founded in 1896 and is headquartered in Columbus, Ohio.