Arrow Financial (NASDAQ:AROW) versus Burke & Herbert Financial Services (NASDAQ:BHRB) Head-To-Head Contrast

Arrow Financial (NASDAQ:AROW) and Burke & Herbert Financial Services (NASDAQ:BHRB) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their analyst recommendations, profitability, risk, valuation, earnings, institutional ownership and dividends.

Valuation and Earnings

This table compares Arrow Financial and Burke & Herbert Financial Services”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arrow Financial	$139.81 million	3.15	$29.71 million	$1.77	14.85
Burke & Herbert Financial Services	$261.95 million	3.50	$35.71 million	$2.40	25.54

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.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Arrow Financial and Burke & Herbert Financial Services, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arrow Financial	0	2	0	0	2.00
Burke & Herbert Financial Services	0	0	2	0	3.00

Arrow Financial presently has a consensus price target of $31.00, suggesting a potential upside of 17.96%. Burke & Herbert Financial Services has a consensus price target of $76.00, suggesting a potential upside of 24.00%. Given Burke & Herbert Financial Services’ stronger consensus rating and higher possible upside, analysts clearly believe Burke & Herbert Financial Services is more favorable than Arrow Financial.

Dividends

Arrow Financial pays an annual dividend of $1.12 per share and has a dividend yield of 4.3%. Burke & Herbert Financial Services pays an annual dividend of $2.20 per share and has a dividend yield of 3.6%. Arrow Financial pays out 63.3% of its earnings in the form of a dividend. 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 is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

46.7% of Arrow Financial shares are owned by institutional investors. 3.6% of Arrow Financial shares are owned by insiders. Comparatively, 9.7% of Burke & Herbert Financial Services shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Arrow Financial and Burke & Herbert Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Arrow Financial	13.32%	8.59%	0.76%
Burke & Herbert Financial Services	8.88%	15.15%	1.35%

Summary

Burke & Herbert Financial Services beats Arrow Financial on 11 of the 15 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 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.