Critical Review: Bank OZK (NASDAQ:OZK) versus Ames National (NASDAQ:ATLO)

Ames National (NASDAQ:ATLO) and Bank OZK (NASDAQ:OZK) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, institutional ownership, valuation, profitability, earnings, analyst recommendations and dividends.

Analyst Recommendations

This is a summary of current ratings and price targets for Ames National and Bank OZK, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ames National	0	2	1	0	2.33
Bank OZK	2	6	3	0	2.09

Ames National presently has a consensus target price of $31.00, suggesting a potential downside of 3.64%. Bank OZK has a consensus target price of $54.57, suggesting a potential upside of 18.32%. Given Bank OZK’s higher probable upside, analysts clearly believe Bank OZK is more favorable than Ames National.

Valuation and Earnings

This table compares Ames National and Bank OZK”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ames National	$98.26 million	2.90	$19.03 million	$2.58	12.47
Bank OZK	$2.81 billion	1.84	$715.48 million	$6.05	7.62

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Ames National	22.64%	11.08%	1.08%
Bank OZK	24.95%	11.87%	1.67%

Insider & Institutional Ownership

26.5% of Ames National shares are held by institutional investors. Comparatively, 86.2% of Bank OZK shares are held by institutional investors. 2.3% of Ames National shares are held by company insiders. Comparatively, 6.7% of Bank OZK shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Dividends

Ames National pays an annual dividend of $0.96 per share and has a dividend yield of 3.0%. Bank OZK pays an annual dividend of $1.96 per share and has a dividend yield of 4.2%. Ames National pays out 37.2% of its earnings in the form of a dividend. Bank OZK pays out 32.4% 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. Bank OZK has increased its dividend for 29 consecutive years. Bank OZK is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Ames National has a beta of 0.31, meaning that its stock price is 69% less volatile than the S&P 500. Comparatively, Bank OZK has a beta of 0.92, meaning that its stock price is 8% less volatile than the S&P 500.

Summary

Bank OZK beats Ames National on 14 of the 17 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 Bank OZK

Bank OZK provides various retail and commercial banking services for individuals and businesses in the United States. The company offers deposit services, including non-interest bearing checking, interest bearing transaction, business sweep, savings, money market, individual retirement, and other accounts, as well as time and reciprocal deposits. It also provides trust and wealth services, such as personal trusts, custodial accounts, investment management accounts, and retirement accounts, as well as corporate trust services, including trustee, paying agent and registered transfer agent services, and other related services. In addition, the company offers treasury management services comprising automated clearing house, wire transfer, transaction reporting, wholesale lockbox, remote deposit capture, automated credit line transfer, reconciliation, positive pay, commercial card, and other services, as well as zero balance and investment sweep accounts. Further, it provides real estate, consumer, small business, indirect recreational vehicle and marine, equipment, agricultural, commercial and industrial, government guaranteed, lines of credit, homebuilder, and affordable housing loans; lender and structured, business aviation, and subscription financing services; and mortgage and other lending products. Additionally, the company offers ATMs; telephone, online, and mobile banking services; credit and debit cards; safe deposit boxes; and other products and services. The company was formerly known as Bank of the Ozarks and changed its name to Bank OZK in July 2018. Bank OZK was founded in 1903 and is headquartered in Little Rock, Arkansas.