Arrow Financial (NASDAQ:AROW) and Westamerica Bancorporation (NASDAQ:WABC) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, earnings, dividends, risk and valuation.
Analyst Recommendations
This is a breakdown of recent ratings for Arrow Financial and Westamerica Bancorporation, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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Arrow Financial | 0 | 1 | 0 | 0 | 2.00 |
Westamerica Bancorporation | 0 | 1 | 0 | 0 | 2.00 |
Arrow Financial presently has a consensus price target of $28.00, suggesting a potential downside of 17.36%. Westamerica Bancorporation has a consensus price target of $58.00, suggesting a potential downside of 9.38%. Given Westamerica Bancorporation's higher probable upside, analysts plainly believe Westamerica Bancorporation is more favorable than Arrow Financial.
Profitability
This table compares Arrow Financial and Westamerica Bancorporation's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
Arrow Financial | 26.71% | 12.14% | 1.10% |
Westamerica Bancorporation | 37.49% | 10.07% | 1.27% |
Institutional & Insider Ownership
42.2% of Arrow Financial shares are held by institutional investors. Comparatively, 77.4% of Westamerica Bancorporation shares are held by institutional investors. 4.0% of Arrow Financial shares are held by company insiders. Comparatively, 4.3% of Westamerica Bancorporation shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
Dividends
Arrow Financial pays an annual dividend of $1.04 per share and has a dividend yield of 3.1%. Westamerica Bancorporation pays an annual dividend of $1.64 per share and has a dividend yield of 2.6%. Arrow Financial pays out 42.8% of its earnings in the form of a dividend. Westamerica Bancorporation pays out 55.0% 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 1 consecutive years and Westamerica Bancorporation has increased its dividend for 1 consecutive years. Arrow Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.
Earnings & Valuation
This table compares Arrow Financial and Westamerica Bancorporation's revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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Arrow Financial | $138.31 million | 3.80 | $37.47 million | $2.43 | 13.94 |
Westamerica Bancorporation | $206.09 million | 8.32 | $80.39 million | $2.98 | 21.48 |
Westamerica Bancorporation has higher revenue and earnings than Arrow Financial. Arrow Financial is trading at a lower price-to-earnings ratio than Westamerica Bancorporation, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Arrow Financial has a beta of 0.64, meaning that its stock price is 36% less volatile than the S&P 500. Comparatively, Westamerica Bancorporation has a beta of 0.7, meaning that its stock price is 30% less volatile than the S&P 500.
Summary
Westamerica Bancorporation beats Arrow Financial on 11 of the 14 factors compared between the two stocks.