Critical review of Arrow Financial (NASDAQ:AROW) versus First Horizon (NYSE:FHN)


Arrow Financial (NASDAQ:AROW – Get Rating) and First Horizon (NYSE:FHN – Get Rating) are both finance companies, but which is the better stock? We will compare the two companies based on their risk strength, analyst recommendations, valuation, profitability, dividends, institutional ownership and earnings.

Institutional and Insider Ownership

43.8% of Arrow Financial’s shares are held by institutional investors. By comparison, 79.6% of First Horizon’s shares are held by institutional investors. 4.2% of Arrow Financial’s stock is held by insiders of the company. By comparison, 1.6% of First Horizon’s shares are held by insiders of the company. Strong institutional ownership indicates that endowments, hedge funds, and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares the net margins, return on equity and return on assets of Arrow Financial and First Horizon.

Net margins Return on equity return on assets
Financial Arrow 33.05% 13.64% 1.22%
first horizon 30.72% 13.82% 1.24%

Benefits and evaluation

This table compares the gross revenue, earnings per share and valuation of Arrow Financial and First Horizon.

Gross revenue Price/sales ratio Net revenue Earnings per share Price/earnings ratio
Financial Arrow $147.92 million 3.38 $49.86 million $3.05 10.24
first horizon $3.25 billion 3.58 $999.00 million $1.68 12.93

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

Volatility and risk

Arrow Financial has a beta of 0.61, suggesting its stock price is 39% less volatile than the S&P 500. In comparison, First Horizon has a beta of 1.14, suggesting its stock price is 14% more volatile than the S&P 500.

Dividends

Arrow Financial pays an annual dividend of $1.08 per share and has a dividend yield of 3.5%. First Horizon pays an annual dividend of $0.60 per share and has a dividend yield of 2.8%. Arrow Financial pays 35.5% of its profits as a dividend. First Horizon pays 35.7% of its earnings as a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings over the next few years. Arrow Financial has increased its dividend for 21 consecutive years. Arrow Financial is clearly the better dividend-paying stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent ratings and recommendations for Arrow Financial and First Horizon, as provided by MarketBeat.com.

Sales Ratings Hold odds Buy reviews Strong buy odds Rating
Financial Arrow 0 0 0 0 N / A
first horizon 0 9 0 0 2.00

First Horizon has a consensus price target of $21.29, suggesting a potential downside of 2.00%. Given First Horizon’s possible higher upside, analysts clearly believe that First Horizon is more favorable than Arrow Financial.

Summary

First Horizon beats Arrow Financial on 9 out of 15 factors compared between the two stocks.

About Arrow Financial (Get a rating)

Arrow Financial Corporation, a bank holding company, provides corporate and personal banking, financial products and services. The Company’s deposit products include demand deposits, interest-bearing checking accounts, savings deposits, term deposits and other term deposits. Its lending activities include commercial loans, such as term loans, term notes and lines of credit; and commercial real estate loans to finance real estate purchases, refinances, expansions and improvements of commercial properties, as well as commercial construction and land development loans to finance projects. The Company’s lending businesses also include consumer installment loans to finance personal expenses, personal lines of credit, overdraft protection and automobile loans; and residential real estate loans, home fixed loans and home equity lines of credit for consumers to finance home renovations, debt consolidation, education and other uses. In addition, it maintains an indirect lending program; and sells residential real estate loan originations in the secondary market. In addition, the company provides retirement planning, trust and estate administration services to individuals; and pension, profit sharing and corporate benefits administration services. In addition, it offers insurance agency services including group healthcare policies and life insurance products, and property and casualty insurance products; and investment advisory services to its proprietary mutual funds, as well as holds a real estate investment trust. The company operates in the upstate New York region in Warren, Washington, Saratoga, Essex, Clinton, Rensselaer, Albany and Schenectady counties and surrounding areas. It has 26 bank branches; and leases 12 bank branches, as well as two residential loan origination offices. Arrow Financial Corporation was founded in 1851 and is headquartered in Glens Falls, New York.

About Premier Horizon (Get a rating)

First Horizon Corporation operates as a bank holding company for First Horizon Bank which provides various financial services. The Company operates through three segments: Regional Bank, Specialized Bank and Corporate. It provides general banking services to consumers, businesses, financial institutions and governments. The company also ensures the subscription of eligible banking securities and other fixed income securities eligible for subscription by financial subsidiaries; sells loans and derivatives; and offers consulting services. In addition, it offers various services, such as mortgage banking; title insurance and loan closing; brokerage; correspondent bank; national check clearing and remittance processing; trust, fiduciary and agency; financing of equipment; and financial advisory and investment services. Additionally, the Company sells mutual funds and retail insurance products; and credit cards. It operates approximately 500 banking offices in 22 states under the First Horizon Bank brand; and 400 banking centers in 12 states under the FHN Financial brand in the United States. The company was formerly known as First Horizon National Corporation and changed its name to First Horizon Corporation in November 2020. First Horizon Corporation was founded in 1864 and is headquartered in Memphis, Tennessee.



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