Reviewing Princeton Bancorp (NASDAQ:BPRN) & Arrow Financial (NASDAQ:AROW)

Princeton Bancorp (NASDAQ:BPRN) 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 risk, valuation, institutional ownership, earnings, analyst recommendations, dividends and profitability.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Princeton Bancorp	N/A	N/A	N/A
Arrow Financial	14.65%	9.46%	0.87%

Earnings & Valuation

This table compares Princeton Bancorp and Arrow Financial”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Princeton Bancorp	$131.10 million	1.82	$17.37 million	$2.57	13.77
Arrow Financial	$223.07 million	2.42	$29.71 million	$2.07	15.87

Arrow Financial has higher revenue and earnings than Princeton Bancorp. Princeton 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 & Insider Ownership

43.4% of Princeton Bancorp shares are held by institutional investors. Comparatively, 46.7% of Arrow Financial shares are held by institutional investors. 23.0% of Princeton Bancorp shares are held by company insiders. Comparatively, 3.3% of Arrow Financial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Volatility and Risk

Princeton Bancorp has a beta of 0.53, suggesting that its share price is 47% less volatile than the S&P 500. Comparatively, Arrow Financial has a beta of 0.82, suggesting that its share price is 18% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and target prices for Princeton Bancorp and Arrow Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Princeton Bancorp	0	2	0	1	2.67
Arrow Financial	0	2	1	0	2.33

Princeton Bancorp currently has a consensus price target of $35.00, suggesting a potential downside of 1.10%. Arrow Financial has a consensus price target of $30.75, suggesting a potential downside of 6.42%. Given Princeton Bancorp’s stronger consensus rating and higher possible upside, analysts plainly believe Princeton Bancorp is more favorable than Arrow Financial.

Dividends

Princeton Bancorp pays an annual dividend of $1.40 per share and has a dividend yield of 4.0%. Arrow Financial pays an annual dividend of $1.16 per share and has a dividend yield of 3.5%. Princeton Bancorp pays out 54.5% of its earnings in the form of a dividend. Arrow Financial pays out 56.0% 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 increased its dividend for 7 consecutive years. Princeton Bancorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Arrow Financial beats Princeton Bancorp on 11 of the 18 factors compared between the two stocks.

About Princeton Bancorp

Princeton Bancorp, Inc. operates as the bank holding company for The Bank of Princeton that provides various banking products and services. It accepts various deposit products, including checking, savings, attorney trust, and money market accounts, as well as certificates of deposit. The company also offers traditional retail banking services, one-to-four-family residential mortgage loans, multi-family and commercial mortgage loans, construction loans, and commercial business loans, as well as consumer loans, including home equity loans and lines of credit. In addition, it provides debit and credit cards, and money orders, direct deposit, automated teller machines, cashier's checks, safe deposit boxes, online banking, wire transfers, night depository, remote deposit capture, bank-by-mail, online, and automated telephone banking services, as well as payroll-related services and merchant credit card processing services. Further, the company offers full on-line statements, on-line bill payment, account inquiries, mobile banking, transaction histories and details, and account-to-account transfer services. Princeton Bancorp, Inc. was founded in 2007 and is headquartered in Princeton, New Jersey.

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.