Critical Review: Alerus Financial (NASDAQ:ALRS) versus Blue Owl Capital (NYSE:OBDC)

Alerus Financial (NASDAQ:ALRS) and Blue Owl Capital (NYSE:OBDC) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, analyst recommendations, profitability, valuation, dividends and institutional ownership.

Analyst Recommendations

This is a breakdown of recent ratings for Alerus Financial and Blue Owl Capital, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Alerus Financial	0	4	1	2	2.71
Blue Owl Capital	1	2	4	2	2.78

Alerus Financial currently has a consensus price target of $26.00, suggesting a potential upside of 2.77%. Blue Owl Capital has a consensus price target of $14.21, suggesting a potential upside of 19.15%. Given Blue Owl Capital’s stronger consensus rating and higher probable upside, analysts clearly believe Blue Owl Capital is more favorable than Alerus Financial.

Risk & Volatility

Alerus Financial has a beta of 0.64, meaning that its stock price is 36% less volatile than the S&P 500. Comparatively, Blue Owl Capital has a beta of 0.67, meaning that its stock price is 33% less volatile than the S&P 500.

Dividends

Alerus Financial pays an annual dividend of $0.84 per share and has a dividend yield of 3.3%. Blue Owl Capital pays an annual dividend of $1.48 per share and has a dividend yield of 12.4%. Alerus Financial pays out 127.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Blue Owl Capital pays out 105.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Alerus Financial has raised its dividend for 25 consecutive years and Blue Owl Capital has raised its dividend for 2 consecutive years. Blue Owl Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

51.3% of Alerus Financial shares are owned by institutional investors. Comparatively, 42.8% of Blue Owl Capital shares are owned by institutional investors. 4.2% of Alerus Financial shares are owned by company insiders. Comparatively, 0.1% of Blue Owl Capital shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Alerus Financial and Blue Owl Capital”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Alerus Financial	$399.92 million	1.61	$17.44 million	$0.66	38.33
Blue Owl Capital	$742.36 million	8.21	$741.06 million	$1.41	8.46

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

Profitability

This table compares Alerus Financial and Blue Owl Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Alerus Financial	4.36%	13.38%	1.34%
Blue Owl Capital	36.89%	10.58%	4.56%

Summary

Blue Owl Capital beats Alerus Financial on 12 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 Blue Owl Capital

Blue Owl Capital Corporation is a business development company. It specializes in direct and fund of fund investments. The fund makes investments in senior secured, direct lending or unsecured loans, subordinated loans or mezzanine loans and also considers equity-related securities including warrants and preferred stocks also pursues preferred equity investments, first lien, unitranche, and second lien term loans and common equity investments. Within private equity, it seeks to invest in growth, acquisitions, market or product expansion, refinancings and recapitalizations. It seeks to invest in middle market and upper middle market companies based in the United States, with EBITDA between $10 million and $250 million annually and/or annual revenue of $50 million and $2.5 billion at the time of investment. It seeks to invest in investments with maturities typically between three and ten years. It seeks to make investments generally ranging in size between $20 million and $250 million.