Peoples Bancorp of North Carolina (NASDAQ:PEBK) & Arrow Financial (NASDAQ:AROW) Financial Analysis

Arrow Financial (NASDAQ:AROW) and Peoples Bancorp of North Carolina (NASDAQ:PEBK) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, profitability, earnings, dividends, risk and institutional ownership.

Earnings & Valuation

This table compares Arrow Financial and Peoples Bancorp of North Carolina”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arrow Financial	$242.58 million	2.93	$43.95 million	$3.10	12.38
Peoples Bancorp of North Carolina	$114.60 million	2.07	$19.83 million	$4.02	10.82

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

Profitability

This table compares Arrow Financial and Peoples Bancorp of North Carolina’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Arrow Financial	20.56%	12.13%	1.17%
Peoples Bancorp of North Carolina	18.93%	13.84%	1.27%

Dividends

Arrow Financial pays an annual dividend of $1.20 per share and has a dividend yield of 3.1%. Peoples Bancorp of North Carolina pays an annual dividend of $0.84 per share and has a dividend yield of 1.9%. Arrow Financial pays out 38.7% of its earnings in the form of a dividend. Peoples Bancorp of North Carolina pays out 20.9% 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 raised its dividend for 7 consecutive years and Peoples Bancorp of North Carolina has raised its dividend for 1 consecutive years. Arrow Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Arrow Financial has a beta of 0.76, indicating that its share price is 24% less volatile than the S&P 500. Comparatively, Peoples Bancorp of North Carolina has a beta of 0.3, indicating that its share price is 70% less volatile than the S&P 500.

Institutional & Insider Ownership

46.7% of Arrow Financial shares are held by institutional investors. Comparatively, 43.8% of Peoples Bancorp of North Carolina shares are held by institutional investors. 3.5% of Arrow Financial shares are held by company insiders. Comparatively, 14.5% of Peoples Bancorp of North Carolina shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations and price targets for Arrow Financial and Peoples Bancorp of North Carolina, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arrow Financial	0	3	3	0	2.50
Peoples Bancorp of North Carolina	0	0	0	1	4.00

Arrow Financial presently has a consensus target price of $41.62, suggesting a potential upside of 8.48%. Given Arrow Financial’s higher possible upside, equities research analysts clearly believe Arrow Financial is more favorable than Peoples Bancorp of North Carolina.

Summary

Arrow Financial beats Peoples Bancorp of North Carolina on 11 of the 18 factors compared between the two stocks.

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 Peoples Bancorp of North Carolina

Peoples Bancorp of North Carolina, Inc. operates as the bank holding company for Peoples Bank that provides various banking products and services for individuals and small-to medium-sized businesses. It offers checking, savings, money market, and retirement accounts; certificates of deposits; and credit and debit cards. The company also originates commercial real estate loans, commercial loans, construction and land development loans, and residential mortgage loans; and individual taxpayer identification number mortgage loans, as well as agricultural loans. In addition, it provides investment counseling and non-deposit investment products, such as stocks, bonds, mutual funds, tax deferred annuities, and related brokerage services; and real estate appraisal and brokerage services. Further, the company operates as a clearing-house for the provision of appraisal services for community banks; and acquires, manages, and disposes real property, other collateral, and other assets obtained in the ordinary course of collecting debts. Peoples Bancorp of North Carolina, Inc. was founded in 1912 and is headquartered in Newton, North Carolina.