Financial Analysis: Alerus Financial (NASDAQ:ALRS) vs. Fidelity D & D Bancorp (NASDAQ:FDBC)

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

Valuation & Earnings

This table compares Alerus Financial and Fidelity D & D Bancorp”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Alerus Financial	$336.51 million	1.55	$21.07 million	$1.02	20.23
Fidelity D & D Bancorp	$126.04 million	1.98	$20.79 million	$3.61	12.04

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

Institutional and Insider Ownership

51.3% of Alerus Financial shares are held by institutional investors. Comparatively, 20.1% of Fidelity D & D Bancorp shares are held by institutional investors. 5.6% of Alerus Financial shares are held by insiders. Comparatively, 21.0% of Fidelity D & D Bancorp shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Risk & Volatility

Alerus Financial has a beta of 0.71, indicating that its stock price is 29% less volatile than the S&P 500. Comparatively, Fidelity D & D Bancorp has a beta of 0.59, indicating that its stock price is 41% less volatile than the S&P 500.

Profitability

This table compares Alerus Financial and Fidelity D & D Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Alerus Financial	6.26%	7.66%	0.68%
Fidelity D & D Bancorp	16.50%	10.49%	0.82%

Analyst Ratings

This is a breakdown of current ratings and price targets for Alerus Financial and Fidelity D & D Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Alerus Financial	0	3	2	0	2.40
Fidelity D & D Bancorp	0	0	0	0	0.00

Alerus Financial presently has a consensus price target of $23.40, suggesting a potential upside of 13.43%. Given Alerus Financial’s stronger consensus rating and higher possible upside, analysts clearly believe Alerus Financial is more favorable than Fidelity D & D Bancorp.

Dividends

Alerus Financial pays an annual dividend of $0.80 per share and has a dividend yield of 3.9%. Fidelity D & D Bancorp pays an annual dividend of $1.60 per share and has a dividend yield of 3.7%. Alerus Financial pays out 78.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Fidelity D & D Bancorp pays out 44.3% of its earnings in the form of a dividend. Alerus Financial has raised its dividend for 24 consecutive years. Alerus Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Alerus Financial beats Fidelity D & D Bancorp on 10 of the 17 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 Fidelity D & D Bancorp

Fidelity D&D Bancorp, Inc. is a holding company, which engages in the provision of commercial banking services. It operates through the following segments: Commercial and Industrial, Commercial Real Estate, Consumer, and Residential Real Estate. The Commercial and Industrial segment refers to identified historic and/or the projected cash flows of the borrower and secondarily to the underlying collateral provided by the borrower. The Commercial Real Estate segment offers finances purchase of real estate, refinance existing obligations, and/or to provide capital. The Consumer segment includes home equity installment loans and lines of credit. The Residential Real Estate segment operates as a secured first lien position of the borrower’s residential real estate. The company was founded in 1902 and is headquartered in Dunmore, PA.