Head to Head Contrast: Arrow Financial (NASDAQ:AROW) vs. Hope Bancorp (NASDAQ:HOPE)

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

Earnings and Valuation

This table compares Hope Bancorp and Arrow Financial”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hope Bancorp	$1.00 billion	1.38	$99.63 million	$0.82	13.93
Arrow Financial	$223.07 million	1.95	$29.71 million	$1.77	14.71

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

Institutional and Insider Ownership

84.0% of Hope Bancorp shares are held by institutional investors. Comparatively, 46.7% of Arrow Financial shares are held by institutional investors. 5.3% of Hope Bancorp shares are held by insiders. Comparatively, 3.6% of Arrow Financial shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Hope Bancorp and Arrow Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hope Bancorp	0	3	1	0	2.25
Arrow Financial	0	2	0	0	2.00

Hope Bancorp presently has a consensus price target of $12.88, suggesting a potential upside of 12.74%. Arrow Financial has a consensus price target of $32.00, suggesting a potential upside of 22.89%. Given Arrow Financial’s higher probable upside, analysts clearly believe Arrow Financial is more favorable than Hope Bancorp.

Dividends

Hope Bancorp pays an annual dividend of $0.56 per share and has a dividend yield of 4.9%. Arrow Financial pays an annual dividend of $1.12 per share and has a dividend yield of 4.3%. Hope Bancorp pays out 68.3% of its earnings in the form of a dividend. Arrow Financial pays out 63.3% 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.

Risk and Volatility

Hope Bancorp has a beta of 1.15, suggesting that its stock price is 15% more volatile than the S&P 500. Comparatively, Arrow Financial has a beta of 0.76, suggesting that its stock price is 24% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Hope Bancorp	9.95%	4.84%	0.59%
Arrow Financial	13.32%	8.59%	0.76%

About Hope Bancorp

Hope Bancorp, Inc. operates as the bank holding company for Bank of Hope that provides retail and commercial banking services for businesses and individuals in the United States. It accepts personal and business checking, money market, savings, time deposit, and individual retirement accounts. The company also offers loans comprising commercial and industrial loans to businesses for various purposes, such as working capital, purchasing inventory, debt refinancing, business acquisitions, international trade finance, other business-related financing, and loans syndication services; commercial real estate loans; residential mortgage loans; small business administration loans; and consumer loans, such as single-family mortgage, home equity, automobile, credit card, and personal loans. In addition, it provides internet banking and bill-pay, remote deposit capture, lock box, and ACH origination services; treasury management services; foreign currency exchange transactions; interest rate contracts and wealth management services; automated teller machine services; and engages in investment activities. Hope Bancorp, Inc. was founded in 1986 and is headquartered in Los Angeles, California.

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.