Shore Bancshares (NASDAQ:SHBI) & Arrow Financial (NASDAQ:AROW) Head-To-Head Review

Arrow Financial (NASDAQ:AROW) and Shore Bancshares (NASDAQ:SHBI) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, risk, valuation, analyst recommendations, earnings, dividends and profitability.

Analyst Ratings

This is a summary of current recommendations and price targets for Arrow Financial and Shore Bancshares, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arrow Financial	0	1	0	0	2.00
Shore Bancshares	0	2	0	0	2.00

Arrow Financial presently has a consensus target price of $31.00, suggesting a potential downside of 6.26%. Shore Bancshares has a consensus target price of $15.00, suggesting a potential downside of 9.80%. Given Arrow Financial’s higher probable upside, equities analysts plainly believe Arrow Financial is more favorable than Shore Bancshares.

Valuation and Earnings

This table compares Arrow Financial and Shore Bancshares”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arrow Financial	$191.68 million	2.89	$30.08 million	$1.96	16.87
Shore Bancshares	$247.24 million	2.24	$11.23 million	$1.25	13.30

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

Dividends

Arrow Financial pays an annual dividend of $1.12 per share and has a dividend yield of 3.4%. Shore Bancshares pays an annual dividend of $0.48 per share and has a dividend yield of 2.9%. Arrow Financial pays out 57.1% of its earnings in the form of a dividend. Shore Bancshares pays out 38.4% 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.

Institutional & Insider Ownership

46.7% of Arrow Financial shares are owned by institutional investors. Comparatively, 59.8% of Shore Bancshares shares are owned by institutional investors. 3.6% of Arrow Financial shares are owned by insiders. Comparatively, 8.6% of Shore Bancshares shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Risk & Volatility

Arrow Financial has a beta of 0.72, indicating that its stock price is 28% less volatile than the S&P 500. Comparatively, Shore Bancshares has a beta of 0.95, indicating that its stock price is 5% less volatile than the S&P 500.

Profitability

This table compares Arrow Financial and Shore Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Arrow Financial	15.00%	8.59%	0.77%
Shore Bancshares	12.85%	10.11%	0.89%

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.

About Shore Bancshares

Shore Bancshares, Inc. operates as a bank holding company for the Shore United Bank, N.A. that provides various commercial and consumer banking products and services to individuals, businesses, and other organizations. It offers checking, savings, overnight investment sweep, and money market accounts; and regular and IRA certificates of deposit, as well as CDARS programs and cash management services. The company also provides commercial loans, such as secured and unsecured loans, working capital loans, lines of credit, term loans, accounts receivable financing, real estate acquisition and development loans, construction loans, and letters of credit; residential real estate construction loans; residential mortgage loans; and loans to consumers, including home equity, automobile, installment, home improvement, and personal lines of credit, as well as other consumer financing products. In addition, it offers trust, asset management, and financial planning services; treasury management services, such as merchant card processing, remote deposit capture, and ACH origination, as well as telephone, mobile, and Internet banking services; safe deposit boxes; debit and credit cards; and automatic teller machine services. Shore Bancshares, Inc. was founded in 1876 and is headquartered in Easton, Maryland.