Arrow Financial (AROW) AI Stock Analysis

• Market Cap: $403.06M
• Dividend Yield: 4.56%
• Average Volume (3M): 38.35K
• Price to Earnings (P/E): 13.6
• Beta (1Y): 0.82
• Revenue Growth: 16.37%
• EPS Growth: 0.52%
• Country: US
• Employees: 554
• Sector: Financial
• Sector Strength: 81
• Industry: Banks - Regional
• EPS (TTM): 1.77
• Shares Outstanding: 16,717,564
• 10 Day Avg. Volume: 36,162
• 30 Day Avg. Volume: 38,355
• PEG Ratio: 26.07
• Price to Book (P/B): N/A
• Price to Sales (P/S): 3.19
• Price to Cash Flow (P/CF): 19.10
• P/FCF Ratio: 4.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $30.00
• Price Target Upside: 24.28% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 1

Arrow Financial receives a solid overall score due to its strong revenue growth and stable financial health, marked by no debt and a strong equity position. While the company faces declining ROE and cash flow challenges, its valuation is reasonable, and recent corporate events are encouraging. Technical analysis shows mixed signals, but positive corporate developments like stock buybacks and dividend increases bolster investor confidence.

Arrow Financial Business Overview & Revenue Model

Company Description

Arrow Financial Corporation (AROW) is a multi-bank holding company headquartered in Glens Falls, New York. It operates in the financial services sector, primarily through its two banking subsidiaries, Glens Falls National Bank and Trust Company and Saratoga National Bank and Trust Company. The company offers a range of financial products and services, including commercial and consumer banking, wealth management, and trust services, catering to individual, business, and municipal clients in northeastern New York.

How the Company Makes Money

Arrow Financial Corporation generates revenue primarily through the interest income from its loan portfolio and investments. The company's key revenue streams include interest earned on commercial and consumer loans, residential mortgages, and investment securities. Additionally, it earns non-interest income from service charges on deposit accounts, wealth management and trust services, and other banking-related fees. Arrow Financial benefits from its strategic geographical presence and community banking model, which fosters strong customer relationships and contributes to a stable deposit base. The company's performance is also influenced by its prudent risk management practices and its ability to adapt to changing market conditions.

Arrow Financial Financial Statement Overview

Summary

Arrow Financial exhibits strong revenue growth and a solid balance sheet with no current debt, indicating financial stability. However, declining ROE and cash flow challenges signal potential profitability and liquidity issues. Operational efficiency could be improved to enhance margins. The company maintains a strong equity position, reducing financial risk.

Income Statement

Arrow Financial's income statement indicates a strong gross profit margin consistently at 100%, which is typical for financial institutions due to interest income being the main revenue. However, the net profit margin has shown fluctuations, with a slight decrease recently. Revenue growth rate between 2023 and 2024 was strong at approximately 45.5%, signaling robust growth. EBIT and EBITDA margins are quite low, suggesting operational efficiency could be improved.

Balance Sheet

The balance sheet is strong with a debt-to-equity ratio of 0, reflecting no debt as of 2024, which is a positive sign of financial health. However, return on equity has been declining, from 13.8% in 2022 to 7.4% in 2024, indicating reduced profitability for shareholders. The equity ratio is healthy at around 9.3%, suggesting a stable capital structure.

Cash Flow

Operating cash flow has significantly decreased from previous years, but free cash flow remains positive, indicating good cash generation. However, the free cash flow growth rate is negative, from $13.5M in 2023 to $2M in 2024, which is concerning. Both operating and free cash flow to net income ratios have decreased, suggesting less efficient cash conversion from profits.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
139.81M	133.95M	149.24M	142.72M	131.86M
	Gross Profit
194.99M	130.57M	149.24M	142.72M	131.86M
	EBIT
2.78M	2.44M	66.67M	64.40M	51.86M
	EBITDA
0.00	0.00	70.46M	72.23M	58.73M
	Net Income Common Stockholders
29.71M	30.07M	48.80M	49.86M	40.83M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
27.42M	142.54M	638.15M	1.02B	746.28M
	Total Assets
4.31B	4.17B	3.97B	4.03B	3.69B
	Total Debt
33.60M	71.57M	79.92M	70.17M	70.22M
	Net Debt
-120.94M	-70.97M	15.26M	-387.53M	-310.77M
	Total Liabilities
3.91B	3.79B	3.62B	70.17M	70.22M
	Stockholders Equity
400.90M	379.77M	353.54M	371.19M	334.39M
Cash Flow		Free Cash Flow
2.02M	13.50M	45.46M	61.07M	37.18M
	Operating Cash Flow
2.02M	20.58M	59.71M	68.21M	42.31M
	Investing Cash Flow
-88.95M	-82.65M	-393.06M	-274.60M	-187.32M
	Financing Cash Flow
66.49M	139.95M	-59.69M	283.10M	455.77M

Arrow Financial Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 24.14
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AROW, the sentiment is Negative. The current price of 24.14 is below the 20-day moving average (MA) of 25.90, below the 50-day MA of 26.35, and below the 200-day MA of 28.10, indicating a bearish trend. The MACD of -0.01 indicates Negative momentum. The RSI at 48.22 is Neutral, neither overbought nor oversold. The STOCH value of 69.87 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AROW.

Arrow Financial Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NBTB	73 Outperform	$1.84B	13.14	9.53%	3.44%	18.58%	11.39%
AROW	70 Neutral	$403.06M	13.59	7.61%	4.56%	16.37%	0.52%
UVSP	68 Neutral	$753.75M	10.06	8.80%	3.23%	11.77%	7.54%
Sector *	63 Neutral	$12.88B	9.21	9.18%	4.78%	16.30%	-8.66%
CHMG	62 Neutral	$205.83M	8.66	11.53%	2.91%	9.39%	-6.09%
TMP	61 Neutral	$830.39M	11.59	10.25%	4.28%	41.65%	668.73%
FISI	48 Neutral	$443.12M	8.52	-8.14%	5.48%	-20.47%	-177.92%

Arrow Financial Corporate Events

Arrow Financial to Present at 2025 Investor Day

Arrow Financial Corporation is set to participate in an Investor Day on March 20, 2025, in Chicago, Illinois, where it will present a mid-quarter update for the first quarter of 2025. This update includes select financial information and is intended for meetings with bank stock analysts and investors. The company has shown a solid start to 2025 with continued net interest margin expansion, strong loan origination rates, and a tangible book value of $22.72 per share as of February 28, 2025. Additionally, Arrow has repurchased approximately $3.4 million of stock and resolved a previously disclosed material weakness.

Arrow Financial Announces Executive Changes for 2025

Arrow Financial Corporation announced the retirement of Gary L. Dake from its Board of Directors after 23 years of service, which will occur following the 2025 Annual Meeting. Additionally, the company has executed new employment agreements effective February 1, 2025, for CEO David S. DeMarco and other executive officers, including annual base salaries and incentive targets, with provisions customary for their positions.

Arrow Financial Reports 2024 Results and Dividend Increase

On January 30, 2025, Arrow Financial Corporation reported its fourth-quarter and full-year 2024 financial results, highlighting a net income of $4.5 million for the quarter, down from the previous year. The company declared a 3.7% increase in its quarterly cash dividend to $0.28 per share, payable on February 24, 2025. Notable achievements in 2024 included the unification of two bank subsidiaries, acquisition of a Whitehall branch, and the assets of a local insurance agency. Despite non-core charges affecting net income, Arrow achieved significant loan growth and an improved net interest margin, positioning itself for increased profitability in 2025.