Financial Analysis: Pagaya Technologies (NASDAQ:PGY) and Alerus Financial (NASDAQ:ALRS)

Alerus Financial (NASDAQ:ALRS) and Pagaya Technologies (NASDAQ:PGY) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, dividends, risk, institutional ownership, profitability, valuation and earnings.

Institutional and Insider Ownership

51.3% of Alerus Financial shares are owned by institutional investors. Comparatively, 57.1% of Pagaya Technologies shares are owned by institutional investors. 4.2% of Alerus Financial shares are owned by insiders. Comparatively, 47.6% of Pagaya Technologies shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Alerus Financial and Pagaya Technologies”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Alerus Financial	$399.92 million	1.58	$17.44 million	$0.66	37.64
Pagaya Technologies	$1.30 billion	0.72	$81.39 million	$0.89	13.12

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

Profitability

This table compares Alerus Financial and Pagaya Technologies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Alerus Financial	4.36%	13.38%	1.34%
Pagaya Technologies	6.25%	44.92%	15.58%

Risk and Volatility

Alerus Financial has a beta of 0.63, meaning that its share price is 37% less volatile than the S&P 500. Comparatively, Pagaya Technologies has a beta of 5.92, meaning that its share price is 492% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Alerus Financial and Pagaya Technologies, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Alerus Financial	0	4	1	2	2.71
Pagaya Technologies	1	1	9	1	2.83

Alerus Financial currently has a consensus price target of $26.00, indicating a potential upside of 4.67%. Pagaya Technologies has a consensus price target of $33.11, indicating a potential upside of 183.49%. Given Pagaya Technologies’ stronger consensus rating and higher possible upside, analysts clearly believe Pagaya Technologies is more favorable than Alerus Financial.

Summary

Pagaya Technologies beats Alerus Financial on 12 of the 15 factors compared between the two stocks.

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.

About Pagaya Technologies

Pagaya Technologies Ltd., a product-focused technology company, deploys data science and proprietary artificial intelligence-powered technology for financial institutions and investors in the United States, Israel, the Cayman Islands, and internationally. The company develops and implements proprietary artificial intelligence technology and related software solutions to assist partners to originate loans and other assets. Its partners include high-growth financial technology companies, incumbent banks and financial institutions, auto finance providers, and residential real estate service providers. Pagaya Technologies Ltd. was incorporated in 2016 and is headquartered in New York, New York.