Burke & Herbert Financial Services (NASDAQ:BHRB – Get Free Report) and Arrow Financial (NASDAQ:AROW – Get Free Report) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, dividends, analyst recommendations, risk, institutional ownership, profitability and earnings.
Profitability
This table compares Burke & Herbert Financial Services and Arrow Financial’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Burke & Herbert Financial Services | 8.88% | 15.15% | 1.35% |
| Arrow Financial | 13.32% | 8.59% | 0.76% |
Analyst Recommendations
This is a breakdown of recent ratings for Burke & Herbert Financial Services and Arrow Financial, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Burke & Herbert Financial Services | 0 | 0 | 2 | 0 | 3.00 |
| Arrow Financial | 0 | 2 | 0 | 0 | 2.00 |
Earnings and Valuation
This table compares Burke & Herbert Financial Services and Arrow Financial”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Burke & Herbert Financial Services | $261.95 million | 3.44 | $35.71 million | $2.40 | 25.06 |
| Arrow Financial | $139.81 million | 3.15 | $29.71 million | $1.77 | 14.84 |
Burke & Herbert Financial Services has higher revenue and earnings than Arrow Financial. Arrow Financial is trading at a lower price-to-earnings ratio than Burke & Herbert Financial Services, indicating that it is currently the more affordable of the two stocks.
Dividends
Burke & Herbert Financial Services pays an annual dividend of $2.20 per share and has a dividend yield of 3.7%. Arrow Financial pays an annual dividend of $1.12 per share and has a dividend yield of 4.3%. Burke & Herbert Financial Services pays out 91.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Arrow Financial pays out 63.3% of its earnings in the form of a dividend. Arrow Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.
Insider & Institutional Ownership
46.7% of Arrow Financial shares are owned by institutional investors. 9.7% of Burke & Herbert Financial Services shares are owned by insiders. Comparatively, 3.6% of Arrow Financial shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
Summary
Burke & Herbert Financial Services beats Arrow Financial on 11 of the 15 factors compared between the two stocks.
About Burke & Herbert Financial Services
Burke Herbert Financial Services Corp. is a bank holding company, which engages in the provision of banking products and financial services to small to medium-sized businesses, their owners and employees, professional corporations, non-profits, and individuals. It operates through the following loan portfolio segments: Commercial Real Estate, Owner-Occupied Commercial Real Estate, Acquisition, Construction, and Development, Commercial and Industrial, Single Family Residential (1-4 Units), and Consumer Non-Real Estate and Other. The Commercial Real Estate segment includes leasing of the real estate collateral or income generated from the sale of the collateral. The Owner-Occupied Commercial Real Estate segment focuses on the operations of the business that occupies the property and the value of the collateral. The Acquisition, Construction, and Development segment offers creditworthiness of the borrower, project completion within budget, sale after completion, and the value of the collateral. The Commercial and Industrial segment is involved in the operations of the business and the value of the collateral. The Single Family Residential (1-4 Units) segment provides loans for investment purpose carry risk associated with the continued creditworthiness of the borrower, the value of the collateral, and either the net operating income generated from the lease of the real estate collateral or income generated from the sale of the collateral. The Consumer Non-Real Estate and Other segment covers loans carry risk associated with the creditworthiness of the borrower and the value of the collateral. The company was founded on September 14, 2022 and is headquartered in Alexandria, VA.
About Arrow Financial
Arrow Financial Corporation, a bank holding company, provides commercial and consumer banking, and financial products and services. The company’s deposit products include demand deposits, interest-bearing checking accounts, savings deposits, time deposits, and other time deposits. Its lending activities comprise commercial loans, such as term loans, time notes, and lines of credit; and commercial real estate loans to finance real estate purchases, refinancing, expansions, and enhancement to commercial properties, as well as commercial construction and land development loans to finance projects. The company’s lending activities also include consumer installment loans to finance personal expenditures, personal lines of credit, overdraft protection, and automobile loans; and residential real estate loans, fixed home equity loans, and home equity lines of credit for consumers to finance home improvements, debt consolidation, education, and other uses. In addition, it maintains an indirect lending program. Further, the company provides retirement planning, trust, and estate administration services for individuals, as well as pension, profit-sharing, and employee benefit plan administration services for corporations. Additionally, it offers insurance agency services comprising group health care policies and life insurance, and property and casualty insurance products; and investment advisory services to its proprietary mutual funds, as well as holds a real estate investment trust. It operates in the northeastern region of New York State in Warren, Washington, Saratoga, Essex, Clinton, Rensselaer, Albany, and Schenectady counties. Arrow Financial Corporation was founded in 1851 and is headquartered in Glens Falls, New York.
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