Analyzing PacWest Banc (PACW) & Arrow Financial (AROW)

PacWest Banc (NASDAQ: PACW) and Arrow Financial (NASDAQ:AROW) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, valuation, earnings, institutional ownership, risk, analyst recommendations and profitability.

Profitability

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This table compares PacWest Banc and Arrow Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
PacWest Banc 32.53% 8.34% 1.69%
Arrow Financial 27.17% 12.21% 1.09%

Valuation & Earnings

This table compares PacWest Banc and Arrow Financial’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
PacWest Banc $1.18 billion 5.80 $357.81 million $2.92 18.76
Arrow Financial $112.30 million 4.66 $29.32 million N/A N/A

PacWest Banc has higher revenue and earnings than Arrow Financial.

Insider & Institutional Ownership

88.0% of PacWest Banc shares are held by institutional investors. Comparatively, 40.3% of Arrow Financial shares are held by institutional investors. 1.0% of PacWest Banc shares are held by insiders. Comparatively, 4.4% of Arrow Financial shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

PacWest Banc pays an annual dividend of $2.00 per share and has a dividend yield of 3.7%. Arrow Financial pays an annual dividend of $1.00 per share and has a dividend yield of 2.7%. PacWest Banc pays out 68.5% of its earnings in the form of a dividend.

Analyst Ratings

This is a breakdown of recent ratings and target prices for PacWest Banc and Arrow Financial, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PacWest Banc 0 5 4 2 2.73
Arrow Financial 0 1 0 0 2.00

PacWest Banc currently has a consensus price target of $54.70, suggesting a potential downside of 0.16%. Arrow Financial has a consensus price target of $37.00, suggesting a potential downside of 1.20%. Given PacWest Banc’s stronger consensus rating and higher probable upside, analysts plainly believe PacWest Banc is more favorable than Arrow Financial.

Volatility & Risk

PacWest Banc has a beta of 1.46, indicating that its stock price is 46% more volatile than the S&P 500. Comparatively, Arrow Financial has a beta of 0.57, indicating that its stock price is 43% less volatile than the S&P 500.

Summary

PacWest Banc beats Arrow Financial on 12 of the 16 factors compared between the two stocks.

PacWest Banc Company Profile

PacWest Bancorp operates as the holding company for Pacific Western Bank, a state chartered bank that provides commercial banking products and services. The company accepts demand, money market, and time deposits. It also provides real estate loans to professional developers and real estate investors for the acquisition, refinancing, and construction of commercial real estate properties; small business administration loans; asset-based loans for working capital needs; venture capital loans to support the start-up operations of entrepreneurial companies; and equipment-secured loans and leases. In addition, the company offers consumer loans comprising personal loans, auto loans, home equity lines of credit, revolving lines of credit, and other loans. Further, it provides international banking and multi-state deposit services; money market sweep products; investment advisory and asset management services; treasury and cash management services; telephone banking, and online and mobile banking services; and foreign exchange and ATM services. The company offers its products and services to small and mid-sized companies, entrepreneurial businesses and their venture capital, private equity investors, professionals, and other individuals. As of February 1, 2018, it had 76 full-service branches located throughout the state of California; and one branch in Durham, North Carolina. The company was formerly known as First Community Bancorp and changed its name to PacWest Bancorp in April 2008. PacWest Bancorp was founded in 1999 and is headquartered in Beverly Hills, California.

Arrow Financial Company Profile

Arrow Financial Corporation, a multi-bank holding company, provides commercial and consumer banking, and financial products and services. Its deposit products include demand deposits, interest-bearing checking accounts, savings deposits, time deposits, and other time deposits. The company's 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 improvements to commercial properties, as well as commercial construction and land development loans to finance projects. Its 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, as well as fixed home equity loans and home equity lines of credit for consumers to finance home improvements, debt consolidation, education, and other uses. In addition, the company maintains an indirect lending program; and sells residential real estate loan originations into the secondary market. Further, it provides retirement planning, trust, and estate administration services for individuals; and pension, profit-sharing, and employee benefit plan administration services for corporations. Additionally, the company 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, as well as surrounding areas. The company owns 29 branch banking offices; and leases 11 branch banking offices, as well as 2 residential loan origination offices. Arrow Financial Corporation was founded in 1851 and is headquartered in Glens Falls, New York.