Comparing Itau Unibanco (NYSE:ITUB) & Alerus Financial (NASDAQ:ALRS)

Alerus Financial (NASDAQ:ALRS) and Itau Unibanco (NYSE:ITUB) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, earnings, institutional ownership, profitability, dividends, risk and analyst recommendations.

Institutional & Insider Ownership

51.2% of Alerus Financial shares are held by institutional investors. 4.3% of Alerus Financial shares are held by insiders. Comparatively, 0.6% of Itau Unibanco 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.

Volatility and Risk

Alerus Financial has a beta of 0.67, meaning that its stock price is 33% less volatile than the S&P 500. Comparatively, Itau Unibanco has a beta of 0.56, meaning that its stock price is 44% less volatile than the S&P 500.

Profitability

This table compares Alerus Financial and Itau Unibanco’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Alerus Financial	6.87%	14.41%	1.55%
Itau Unibanco	26.41%	21.40%	1.53%

Valuation and Earnings

This table compares Alerus Financial and Itau Unibanco”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	$233.70 million	3.46	$17.44 million	$1.06	30.58
Itau Unibanco	$169.37 billion	0.53	$8.03 billion	$0.76	10.74

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

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Alerus Financial and Itau Unibanco, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Alerus Financial	0	6	1	0	2.14
Itau Unibanco	0	1	2	0	2.67

Alerus Financial presently has a consensus price target of $35.50, indicating a potential upside of 9.50%. Itau Unibanco has a consensus price target of $10.00, indicating a potential upside of 22.56%. Given Itau Unibanco’s stronger consensus rating and higher probable upside, analysts plainly believe Itau Unibanco is more favorable than Alerus Financial.

Dividends

Alerus Financial pays an annual dividend of $0.88 per share and has a dividend yield of 2.7%. Itau Unibanco pays an annual dividend of $0.03 per share and has a dividend yield of 0.4%. Alerus Financial pays out 83.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Itau Unibanco pays out 3.9% of its earnings in the form of a dividend. Alerus Financial has raised its dividend for 25 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 Itau Unibanco on 9 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 Itau Unibanco

Itaú Unibanco Holding S.A. offers a range of financial products and services to individuals and corporate customers in Brazil and internationally. The company operates through three segments: Retail Banking, Wholesale Banking, and Activities with the Market + Corporation. It offers current account; loans; credit and debit cards; investment and commercial banking services; real estate lending services; financing and investment services; economic, financial and brokerage advisory; and leasing and foreign exchange services. The company also provides property and casualty insurance products covering loss, damage, or liabilities for assets or persons, as well as life insurance products covering death and personal accident. It serves retail customers, account and non-account holders, individuals and legal entities, high income clients, microenterprises, and small companies, as well as middle-market companies and high net worth clients. The company was formerly known as Itaú Unibanco Banco Múltiplo S.A. and changed its name to Itaú Unibanco Holding S.A. in April 2009. The company was incorporated in 1924 and is headquartered in São Paulo, Brazil. Itaú Unibanco Holding S.A. operates as a subsidiary of IUPAR – Itaú Unibanco Participações S.A.