NASDAQ:ATLO
$20.91
(3/19 4:00PM)
+2.9%
| Open | $20.48 |
Mkt Cap | $191.7 Million |
| High | $20.91 |
52Wk High | $27.00 |
| Low | $20.45 |
52Wk Low | $16.68 |
| Volume | 23,211 |
Avg Vol 10D | 3,500 |
A Word Of Caution
While we stand by our ratings methodology for long term value investors, sometimes smaller companies will be more volatile in terms of revenue, cash earnings, and other fundamental factors. Ames National Corporation (ATLO) is such a stock. Because many micro-caps are lightly traded their stock price can fluctuate because of a single large trade. Also, there is less analyst coverage of such micro-caps and therefore less information from which to base our ratings.
While this company may not get as much press because of its small size, please take a moment to look at the RazorWire feed on the right hand side of the report. Any time Ames National Corp. is mentioned on business television or influential blogs a clip of that will be displayed. This helps to bring you up to speed on any major issues they are facing right now, both positive or negative.
Therefore, (and as always), check additional sources and available information regarding ATLO before making an investment decision.
ATLO Revenue
For a long time, value investors have used the current share price relative to sales per share levels as an important valuation tool. We utilize a historical weighted average methodology that treats recent years more importantly in the calculation. When looking at ATLO through this framework, we can see that our weighted average historical high and low Price to Sales per share ratios over the last 10 years are 6.86x and 3.84x respectively.
Utilizing this range we can see that ATLO’s current Price to Sales per share ratio of 4.11x is quite a bit below what we consider a normal Price to Sales ratio for this stock. Given normal conditions and a price of $19.98, ATLO is 24% below where we would expect to see it. This will beneficially factor into our final analysis of ATLO as it is not often that this stock sinks to these levels.
ATLO Cash Earnings
Looking at ATLO specifically in their Cash Earnings capabilities, Ockham views ATLO as significantly below its historical average multiple of Cash Earnings. Looking at the last 10 years we can get a good understanding of what investors have grown to expect from ATLO. For example, ATLO's Cash Earnings ratio per share has fluctuated between 19.13 and 36.46 over this historical timeframe. This range is based upon a proprietary weighted methodology at Ockham, but can clearly show an investor where ATLO is with respect to prior business periods.
So with ATLO's current price (latest close of $19.98) and most recent level of Cash Earnings reported, we see significant opportunity from a value perspective. At its current price level, ATLO is 25% below its average level of Price to Cash Earnings on a historical basis. This means that investors were willing to pay for a much higher stock price than currently for the same level of Cash in the past, on a relative basis. There are a couple of important things to remember, however. First, value doesn't exist in a vacuum. So if the market doesn't recognize this value, even a great disparity in Price to Cash Earnings cannot force an immediate stock price reaction. Second, patience is key when looking at securities that have reached these levels of Price to Cash Earnings versus their historical norms. So be patient with ATLO.
ATLO Dividends
A strong dividend payment history is looked upon as a favorable characteristic on a company’s future and potentially can receive a positive Ockham rating. That being said, we don't require dividend payments for company's whose management has elected to forgo them entirely.
When reviewing dividend yields for ATLO, we compare the historic high and low levels over the past, which is similar to our evaluation of Sales and Cash Earnings per share. Paying a dividend is not necessary for any company, but changes in dividend often can lend clues as to the health of the business. A rising dividend is a strong sign for an established company, as it reflects management's confidence in the company. ATLO’s estimated annual dividend is $0.44 resulting in a current dividend yield of 2.20%. The highest dividend yield from ATLO over recent history was 7.33% while the lowest dividend yield was 1.47%. With that range in mind, ATLO’s current dividend yield is a full 50.00% below its median dividend yield historically. This is a negative from our perspective.
