Alerus Financial (NASDAQ:ALRS – Get Free Report) and Synchrony Financial (NYSE:SYF – Get Free Report) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, analyst recommendations, earnings, institutional ownership, profitability, risk and dividends.
Institutional & Insider Ownership
51.2% of Alerus Financial shares are owned by institutional investors. Comparatively, 96.5% of Synchrony Financial shares are owned by institutional investors. 4.3% of Alerus Financial shares are owned by company insiders. Comparatively, 0.4% of Synchrony Financial shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Dividends
Alerus Financial pays an annual dividend of $0.88 per share and has a dividend yield of 2.6%. Synchrony Financial pays an annual dividend of $1.20 per share and has a dividend yield of 1.6%. Alerus Financial pays out 85.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Synchrony Financial pays out 12.3% of its earnings in the form of a dividend. Alerus Financial has increased its dividend for 25 consecutive years and Synchrony Financial has increased its dividend for 4 consecutive years. Alerus Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk and Volatility
Analyst Ratings
This is a breakdown of recent ratings and price targets for Alerus Financial and Synchrony Financial, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Alerus Financial | 0 | 4 | 2 | 1 | 2.57 |
| Synchrony Financial | 0 | 8 | 12 | 0 | 2.60 |
Alerus Financial presently has a consensus target price of $30.50, indicating a potential downside of 8.23%. Synchrony Financial has a consensus target price of $86.89, indicating a potential upside of 14.46%. Given Synchrony Financial’s stronger consensus rating and higher possible upside, analysts plainly believe Synchrony Financial is more favorable than Alerus Financial.
Profitability
This table compares Alerus Financial and Synchrony Financial’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Alerus Financial | 6.74% | 14.39% | 1.51% |
| Synchrony Financial | 15.44% | 23.09% | 2.98% |
Earnings & Valuation
This table compares Alerus Financial and Synchrony Financial”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Alerus Financial | $399.92 million | 2.09 | $17.44 million | $1.03 | 32.27 |
| Synchrony Financial | $22.60 billion | 1.09 | $3.55 billion | $9.76 | 7.78 |
Synchrony Financial has higher revenue and earnings than Alerus Financial. Synchrony Financial is trading at a lower price-to-earnings ratio than Alerus Financial, indicating that it is currently the more affordable of the two stocks.
Summary
Synchrony Financial beats Alerus Financial on 12 of the 18 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 Synchrony Financial
Synchrony Financial, together with its subsidiaries, operates as a consumer financial services company in the United States. It provides credit products, such as credit cards, commercial credit products, and consumer installment loans. The company also offers private label credit cards, dual co-brand and general purpose credit cards, short- and long-term installment loans, and consumer banking products; and deposit products, including certificates of deposit, individual retirement accounts, money market accounts, and savings accounts, and sweep and affinity deposits, as well as accepts deposits through third-party securities brokerage firms. In addition, it provides debt cancellation products to its credit card customers through online, mobile, and direct mail; and healthcare payments and financing solutions under the CareCredit and Walgreens brands; payments and financing solutions in the apparel, specialty retail, outdoor, music, and luxury industries, such as American Eagle, Dick's Sporting Goods, Guitar Center, Kawasaki, Pandora, Polaris, Suzuki, and Sweetwater. The company offers its credit products through programs established with a group of national and regional retailers, local merchants, manufacturers, buying groups, industry associations, and healthcare service providers; and deposit products through various channels, such as digital and print. It serves digital, health and wellness, retail, home, auto, telecommunications, jewelry, pets, and other industries. The company was founded in 1932 and is headquartered in Stamford, Connecticut.
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