Contrasting Ames National (NASDAQ:ATLO) and Wintrust Financial (NASDAQ:WTFC)

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

Profitability

This table compares Ames National and Wintrust Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ames National	16.68%	8.53%	0.75%
Wintrust Financial	18.85%	12.82%	1.20%

Valuation & Earnings

This table compares Ames National and Wintrust Financial”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ames National	$92.44 million	2.26	$10.22 million	$1.80	13.06
Wintrust Financial	$3.97 billion	2.44	$695.04 million	$10.88	13.30

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

Insider & Institutional Ownership

26.5% of Ames National shares are held by institutional investors. Comparatively, 93.5% of Wintrust Financial shares are held by institutional investors. 2.1% of Ames National shares are held by company insiders. Comparatively, 1.0% of Wintrust Financial shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

Ames National pays an annual dividend of $0.80 per share and has a dividend yield of 3.4%. Wintrust Financial pays an annual dividend of $2.00 per share and has a dividend yield of 1.4%. Ames National pays out 44.4% of its earnings in the form of a dividend. Wintrust Financial pays out 18.4% 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. Wintrust Financial has increased its dividend for 12 consecutive years.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Ames National and Wintrust Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ames National	0	0	1	0	3.00
Wintrust Financial	0	2	11	1	2.93

Wintrust Financial has a consensus target price of $154.50, suggesting a potential upside of 6.76%. Given Wintrust Financial’s higher probable upside, analysts clearly believe Wintrust Financial is more favorable than Ames National.

Volatility and Risk

Ames National has a beta of 0.4, suggesting that its stock price is 60% less volatile than the S&P 500. Comparatively, Wintrust Financial has a beta of 0.88, suggesting that its stock price is 12% less volatile than the S&P 500.

Summary

Wintrust Financial beats Ames National on 15 of the 18 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 Wintrust Financial

Wintrust Financial Corporation operates as a financial holding company. It operates in three segments: Community Banking, Specialty Finance, and Wealth Management. The Community Banking segment offers non-interest bearing deposits, non-brokered interest-bearing transaction accounts, and savings and domestic time deposits; home equity, consumer, and real estate loans; safe deposit facilities; and automatic teller machine (ATM), online and mobile banking, and other services. It also engages in the retail origination and purchase of residential mortgages; and provision of lending, deposits, and treasury management services to condominium, homeowner, and community associations, as well as asset-based lending for middle-market companies. In addition, this segment offers loan and deposit services to mortgage brokerage companies; lending to restaurant franchisees; direct leasing; small business administration loans; commercial mortgages and construction loans; and financial solutions. It provides personal and commercial banking services primarily to individuals, small to mid-sized businesses, local governmental units, and institutional clients. The Specialty Finance segment offers commercial and life insurance premiums financing for businesses and individuals; accounts receivable financing, value-added, and out-sourced administrative services; other specialty finance services; equipment financing through structured loan and lease products; and property and casualty premium financing; as well as data processing of payrolls, billing, and cash management services to temporary staffing industry. The Wealth Management segment provides wealth management services, such as trust and investment, asset management, tax-deferred exchange, securities brokerage, and retirement plan services. Wintrust Financial Corporation was founded in 1991 and is headquartered in Rosemont, Illinois.