Arrow Financial (NASDAQ:AROW – Get Free Report) and Eagle Bancorp (NASDAQ:EGBN – Get Free Report) are both small-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, valuation, risk, institutional ownership, analyst recommendations, earnings and profitability.
Dividends
Arrow Financial pays an annual dividend of $1.20 per share and has a dividend yield of 3.3%. Eagle Bancorp pays an annual dividend of $0.04 per share and has a dividend yield of 0.1%. Arrow Financial pays out 38.7% of its earnings in the form of a dividend. Eagle Bancorp pays out -3.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Arrow Financial has increased its dividend for 7 consecutive years. Arrow Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings and Valuation
This table compares Arrow Financial and Eagle Bancorp”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Arrow Financial | $242.58 million | 2.81 | $43.95 million | $3.10 | 11.88 |
| Eagle Bancorp | $634.26 million | 1.34 | -$138.05 million | ($1.26) | -22.11 |
Arrow Financial has higher earnings, but lower revenue than Eagle Bancorp. Eagle Bancorp is trading at a lower price-to-earnings ratio than Arrow Financial, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Arrow Financial and Eagle Bancorp’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Arrow Financial | 20.56% | 12.13% | 1.17% |
| Eagle Bancorp | -6.43% | -3.37% | -0.37% |
Analyst Ratings
This is a breakdown of recent ratings for Arrow Financial and Eagle Bancorp, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Arrow Financial | 0 | 3 | 3 | 0 | 2.50 |
| Eagle Bancorp | 1 | 2 | 1 | 1 | 2.40 |
Arrow Financial currently has a consensus price target of $41.62, suggesting a potential upside of 12.99%. Eagle Bancorp has a consensus price target of $31.00, suggesting a potential upside of 11.27%. Given Arrow Financial’s stronger consensus rating and higher possible upside, analysts clearly believe Arrow Financial is more favorable than Eagle Bancorp.
Volatility and Risk
Arrow Financial has a beta of 0.76, indicating that its share price is 24% less volatile than the S&P 500. Comparatively, Eagle Bancorp has a beta of 0.98, indicating that its share price is 2% less volatile than the S&P 500.
Institutional & Insider Ownership
46.7% of Arrow Financial shares are owned by institutional investors. Comparatively, 78.0% of Eagle Bancorp shares are owned by institutional investors. 3.5% of Arrow Financial shares are owned by company insiders. Comparatively, 3.1% of Eagle Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Summary
Arrow Financial beats Eagle Bancorp on 13 of the 18 factors compared between the two stocks.
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.
About Eagle Bancorp
Eagle Bancorp, Inc. operates as the bank holding company for EagleBank that provides commercial and consumer banking services primarily in the United States. The company also offers various commercial and consumer lending products comprising commercial loans for working capital, equipment purchases, real estate lines of credit, and government contract financing; asset based lending and accounts receivable financing; construction and commercial real estate loans; business equipment financing; consumer home equity lines of credit, personal lines of credit, and term loans; consumer installment loans, such as auto and personal loans; personal credit cards; and residential mortgage loans. In addition, it provides online and mobile banking services; checking and saving accounts; and other deposit services, including cash management services, business sweep accounts, lock boxes, remote deposit captures, account reconciliation services, merchant card services, safety deposit boxes, and automated clearing house origination, as well as after-hours depositories and ATM services. Further, the company offers insurance products and services through a referral program; and treasury management services. The company serves sole proprietors, small and medium-sized businesses, partnerships, corporations, and non-profit organizations and associations, as well as investors. Eagle Bancorp, Inc. was incorporated in 1997 and is headquartered in Bethesda, Maryland.
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