Reviewing Arrow Financial (NASDAQ:AROW) and Pathward Financial (NASDAQ:CASH)

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

Valuation & Earnings

This table compares Arrow Financial and Pathward Financial”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arrow Financial	$191.68 million	2.35	$30.08 million	$1.96	13.70
Pathward Financial	$775.94 million	2.51	$168.36 million	$6.86	11.75

Pathward Financial has higher revenue and earnings than Arrow Financial. Pathward Financial 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 Pathward Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Arrow Financial	15.00%	8.59%	0.77%
Pathward Financial	21.91%	22.02%	2.28%

Volatility and Risk

Arrow Financial has a beta of 0.77, meaning that its share price is 23% less volatile than the S&P 500. Comparatively, Pathward Financial has a beta of 0.72, meaning that its share price is 28% less volatile than the S&P 500.

Dividends

Arrow Financial pays an annual dividend of $1.12 per share and has a dividend yield of 4.2%. Pathward Financial pays an annual dividend of $0.20 per share and has a dividend yield of 0.2%. Arrow Financial pays out 57.1% of its earnings in the form of a dividend. Pathward Financial pays out 2.9% 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.

Analyst Recommendations

This is a summary of recent ratings for Arrow Financial and Pathward Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arrow Financial	0	2	0	0	2.00
Pathward Financial	0	1	1	0	2.50

Arrow Financial presently has a consensus target price of $32.00, indicating a potential upside of 19.16%. Pathward Financial has a consensus target price of $90.50, indicating a potential upside of 12.26%. Given Arrow Financial’s higher possible upside, equities analysts plainly believe Arrow Financial is more favorable than Pathward Financial.

Institutional and Insider Ownership

46.7% of Arrow Financial shares are owned by institutional investors. Comparatively, 92.7% of Pathward Financial shares are owned by institutional investors. 3.6% of Arrow Financial shares are owned by company insiders. Comparatively, 1.2% of Pathward Financial shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Pathward Financial beats Arrow Financial on 11 of the 16 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 Pathward Financial

Pathward Financial, Inc. operates as the bank holding company for Pathward, National Association that provides various banking products and services in the United States. The company operates through three segments: Consumer, Commercial, and Corporate Services/Other. It offers demand deposit accounts, savings accounts, and money market savings accounts. The company also provides commercial finance product comprising term lending, asset-based lending, factoring, lease financing, insurance premium finance, government guaranteed lending, and other commercial finance products; consumer credit products; other consumer financing services; tax services, which includes short-term refund advance loans and short-term electronic return originator advance loans; and warehouse financing services. In addition, it issues prepaid cards; and offers payment solutions, such as acceptance, processing, and settlement of credit card and debit card payments. The company was formerly known as Meta Financial Group, Inc. and changed its name to Pathward Financial, Inc. in July 2022. Pathward Financial, Inc. was founded in 1954 and is based in Sioux Falls, South Dakota.