Contrasting 1st Source (NASDAQ:SRCE) & Ames National (NASDAQ:ATLO)

1st Source (NASDAQ:SRCE) and Ames National (NASDAQ:ATLO) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, profitability, dividends, analyst recommendations, risk, valuation and institutional ownership.

Profitability

This table compares 1st Source and Ames National’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
1st Source	24.02%	11.94%	1.61%
Ames National	14.44%	7.46%	0.64%

Analyst Ratings

This is a breakdown of current ratings and recommmendations for 1st Source and Ames National, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
1st Source	0	2	1	0	2.33
Ames National	0	0	0	0	0.00

1st Source currently has a consensus target price of $72.00, indicating a potential upside of 12.22%. Given 1st Source’s stronger consensus rating and higher possible upside, equities analysts clearly believe 1st Source is more favorable than Ames National.

Dividends

1st Source pays an annual dividend of $1.52 per share and has a dividend yield of 2.4%. Ames National pays an annual dividend of $0.80 per share and has a dividend yield of 4.0%. 1st Source pays out 26.6% of its earnings in the form of a dividend. Ames National pays out 51.9% 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. 1st Source has raised its dividend for 38 consecutive years.

Earnings and Valuation

This table compares 1st Source and Ames National”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
1st Source	$574.21 million	2.74	$132.62 million	$5.71	11.24
Ames National	$92.44 million	1.94	$10.22 million	$1.54	13.09

1st Source has higher revenue and earnings than Ames National. 1st Source is trading at a lower price-to-earnings ratio than Ames National, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

1st Source has a beta of 0.72, meaning that its stock price is 28% less volatile than the S&P 500. Comparatively, Ames National has a beta of 0.49, meaning that its stock price is 51% less volatile than the S&P 500.

Insider & Institutional Ownership

74.5% of 1st Source shares are owned by institutional investors. Comparatively, 26.5% of Ames National shares are owned by institutional investors. 19.6% of 1st Source shares are owned by company insiders. Comparatively, 2.1% of Ames National shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

1st Source beats Ames National on 15 of the 17 factors compared between the two stocks.

About 1st Source

1st Source Corporation operates as the bank holding company for 1st Source Bank that provides commercial and consumer banking services, trust and wealth advisory services, and insurance products to individual and business clients. Its consumer banking services include checking and savings accounts; certificates of deposit; individual retirement accounts; online and mobile banking products; consumer loans, real estate mortgage loans, and home equity lines of credit; and financial planning, financial literacy, and other consultative services, as well as debit and credit cards. The company also offers commercial, small business, agricultural, and real estate loans for general corporate purposes, including financing for industrial and commercial properties, equipment, inventories, accounts receivables, and renewable energy and acquisition financing; and commercial leasing, treasury management, and retirement planning services. In addition, it provides trust, investment, agency, and custodial services comprising administration of estates and personal trusts, as well as management of investment accounts for individuals, employee benefit plans, and charitable foundations. Further, the company offers equipment loan and lease products for construction equipment, new and pre-owned aircraft, auto and light trucks, and medium and heavy duty trucks; and finances construction equipment, aircrafts, medium and heavy duty trucks, step vans, vocational work trucks, motor coaches, shuttle buses, funeral cars, automobiles, and other equipment. Additionally, it provides corporate and personal property, casualty, and individual and group health and life insurance products and services. 1st Source Corporation was founded in 1863 and is headquartered in South Bend, Indiana.

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.