Comparing Arrow Financial (NASDAQ:AROW) and Bank OZK (NASDAQ:OZK)

Bank OZK (NASDAQ:OZK) and Arrow Financial (NASDAQ:AROW) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, profitability, valuation, risk, earnings, institutional ownership and dividends.

Risk & Volatility

Bank OZK has a beta of 0.91, meaning that its share price is 9% less volatile than the S&P 500. Comparatively, Arrow Financial has a beta of 0.78, meaning that its share price is 22% less volatile than the S&P 500.

Insider & Institutional Ownership

86.2% of Bank OZK shares are owned by institutional investors. Comparatively, 46.7% of Arrow Financial shares are owned by institutional investors. 6.7% of Bank OZK shares are owned by insiders. Comparatively, 3.3% of Arrow Financial shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Bank OZK pays an annual dividend of $1.88 per share and has a dividend yield of 3.9%. Arrow Financial pays an annual dividend of $1.20 per share and has a dividend yield of 3.2%. Bank OZK pays out 30.6% of its earnings in the form of a dividend. Arrow Financial pays out 38.8% 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. Bank OZK has raised its dividend for 29 consecutive years and Arrow Financial has raised its dividend for 7 consecutive years. Bank OZK is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Bank OZK	25.27%	12.32%	1.71%
Arrow Financial	20.72%	12.54%	1.17%

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bank OZK	$1.73 billion	3.14	$715.48 million	$6.14	7.90
Arrow Financial	$171.16 million	3.58	$43.95 million	$3.09	12.00

Bank OZK has higher revenue and earnings than Arrow Financial. Bank OZK is trading at a lower price-to-earnings ratio than Arrow Financial, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Bank OZK and Arrow Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bank OZK	1	5	5	0	2.36
Arrow Financial	0	1	1	0	2.50

Bank OZK presently has a consensus price target of $56.89, indicating a potential upside of 17.35%. Arrow Financial has a consensus price target of $34.50, indicating a potential downside of 6.93%. Given Bank OZK’s higher probable upside, equities analysts plainly believe Bank OZK is more favorable than Arrow Financial.

Summary

Bank OZK beats Arrow Financial on 13 of the 17 factors compared between the two stocks.

About Bank OZK

Bank OZK provides various retail and commercial banking services for individuals and businesses in the United States. The company offers deposit services, including non-interest bearing checking, interest bearing transaction, business sweep, savings, money market, individual retirement, and other accounts, as well as time and reciprocal deposits. It also provides trust and wealth services, such as personal trusts, custodial accounts, investment management accounts, and retirement accounts, as well as corporate trust services, including trustee, paying agent and registered transfer agent services, and other related services. In addition, the company offers treasury management services comprising automated clearing house, wire transfer, transaction reporting, wholesale lockbox, remote deposit capture, automated credit line transfer, reconciliation, positive pay, commercial card, and other services, as well as zero balance and investment sweep accounts. Further, it provides real estate, consumer, small business, indirect recreational vehicle and marine, equipment, agricultural, commercial and industrial, government guaranteed, lines of credit, homebuilder, and affordable housing loans; lender and structured, business aviation, and subscription financing services; and mortgage and other lending products. Additionally, the company offers ATMs; telephone, online, and mobile banking services; credit and debit cards; safe deposit boxes; and other products and services. The company was formerly known as Bank of the Ozarks and changed its name to Bank OZK in July 2018. Bank OZK was founded in 1903 and is headquartered in Little Rock, Arkansas.

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.