Arrow Financial (AROW) AI Stock Analysis

• Market Cap: $590.28M
• Dividend Yield: 3.59%
• Average Volume (3M): 64.83K
• Price to Earnings (P/E): 13.5
• Beta (1Y): 0.84
• Revenue Growth: 6.86%
• EPS Growth: 6.11%
• Country: US
• Employees: 580
• Sector: Financial
• Sector Strength: 70
• Industry: Banks - Regional
• EPS (TTM): 0.85
• Shares Outstanding: 16,442,453
• 10 Day Avg. Volume: 87,992
• 30 Day Avg. Volume: 64,831
• PEG Ratio: 28.63
• Price to Book (P/B): 1.20
• Price to Sales (P/S): 2.15
• P/FCF Ratio: 16.65
• Enterprise Value/Market Cap: 1.00
• Enterprise Value/Revenue: 2.51
• Enterprise Value/Gross Profit: 4.01
• Enterprise Value/Ebitda: 11.93
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 75 Outperform
• Price Target: $36.00 ▲(18.07% Upside)

The score is driven primarily by solid financial fundamentals (strong balance sheet with very low leverage and stable profitability) and supportive technicals (price holding above key moving averages with positive MACD). Valuation and yield are reasonable, and recent corporate news (record earnings and a dividend increase) adds a positive tailwind.

Positive Factors

Conservative Capital Structure

A very low debt-to-equity ratio indicates conservative leverage and strong capital buffers, giving the bank durable financial flexibility to absorb credit losses, fund organic growth, and pursue strategic initiatives without relying heavily on external debt markets over the next several quarters.

Strong Cash Generation

Robust free cash flow growth signals reliable internal funding for dividends, reinvestment, and balance sheet strengthening. Consistent FCF conversion supports sustainable shareholder distributions and capital allocation choices while reducing dependence on volatile external financing.

NIM Expansion & Operational Integration

Sustained net interest margin expansion plus completion of subsidiary system integration drove meaningful efficiency gains and a large EPS increase in 2025. These structural improvements enhance long-term net interest income stability and lower operating cost per unit of business.

Negative Factors

Declining Gross Margin Trend

A declining gross profit margin points to rising funding or operating costs that could compress earnings if not offset by higher yields or cost reductions. Over several quarters this trend can erode operating leverage and limit the durability of reported profitability gains.

Moderate Return on Equity

An ROE under 10% despite a strong equity base suggests limited capital efficiency. Over the medium term this may constrain shareholder returns and indicate room for more effective deployment of capital through higher-yielding loans, fee businesses, or strategic initiatives.

Modest Revenue Growth

Low single-digit revenue growth implies limited top-line momentum absent new product lines or market expansion. Persistently modest revenue growth makes earnings gains more dependent on margin improvement or capital deployment rather than broad-based business expansion.

Arrow Financial Business Overview & Revenue Model

Company Description

Arrow Financial Corporation (AROW) is a diversified financial services company that operates primarily in the banking and insurance sectors. It offers a range of banking products including loans, savings accounts, and mortgages through its subsidiaries. Additionally, Arrow Financial provides various insurance products, including life, health, and property insurance, catering to both individual and business clients. The company is committed to delivering tailored financial solutions and fostering strong relationships with its customers.

How the Company Makes Money

Arrow Financial generates revenue through multiple streams, primarily from interest income on loans and mortgages, as well as fees associated with its banking services. The company earns significant income from its insurance operations through premiums collected from policyholders. Additionally, it may derive revenue from investment income generated by managing assets and investing in securities. Strategic partnerships with other financial institutions and service providers further enhance its offerings and contribute to its earnings, allowing for cross-selling opportunities and expanded market reach.

Arrow Financial Financial Statement Overview

Summary

Overall financials are solid: Income Statement score (75) reflects stable profitability (15.22% TTM net margin) with modest revenue growth and some margin pressure; Balance Sheet score (80) is supported by very low leverage (0.07 debt-to-equity) and a strong equity position; Cash Flow score (70) benefits from strong free cash flow growth (21.32% TTM) but is limited by missing operating cash flow efficiency metrics.

Income Statement

Arrow Financial shows a consistent revenue growth trend with a TTM revenue growth rate of 2.06%. The gross profit margin has decreased over time, indicating potential cost pressures. However, the net profit margin remains stable at 15.22% TTM, reflecting effective cost management. EBIT and EBITDA margins are healthy, suggesting strong operational efficiency.

Balance Sheet

The company maintains a low debt-to-equity ratio of 0.07 TTM, indicating prudent financial leverage. Return on equity is moderate at 8.44% TTM, showing effective use of equity capital. The equity ratio is strong, highlighting a solid capital structure with a high proportion of equity financing.

Cash Flow

Free cash flow growth is robust at 21.32% TTM, indicating strong cash generation capabilities. The free cash flow to net income ratio is high, reflecting efficient conversion of earnings into cash. However, the operating cash flow to net income ratio is not available, limiting a complete assessment of cash flow efficiency.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	234.83M	223.07M	191.68M	160.55M	147.92M	144.55M
Gross Profit	146.82M	134.63M	130.57M	144.44M	142.45M	122.54M
EBITDA	49.33M	42.72M	44.24M	70.46M	72.23M	58.73M
Net Income	34.41M	29.71M	30.07M	48.80M	49.86M	40.83M
Balance Sheet
Total Assets	4.59B	4.31B	4.17B	3.97B	4.03B	3.69B
Cash, Cash Equivalents and Short-Term Investments	921.34M	617.66M	640.30M	638.15M	1.02B	746.28M
Total Debt	29.19M	33.60M	71.57M	106.92M	70.17M	87.70M
Total Liabilities	4.17B	3.91B	3.79B	3.62B	3.66B	3.35B
Stockholders Equity	417.69M	400.90M	379.77M	353.54M	371.19M	334.39M
Cash Flow
Free Cash Flow	35.47M	28.87M	13.50M	45.46M	61.07M	37.18M
Operating Cash Flow	41.00M	34.47M	20.58M	59.71M	68.21M	42.31M
Investing Cash Flow	-128.16M	-88.95M	-82.65M	-393.06M	-274.60M	-187.32M
Financing Cash Flow	144.51M	66.49M	139.95M	-59.69M	283.10M	455.77M

Arrow Financial Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 30.49
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AROW, the sentiment is Positive. The current price of 30.49 is below the 20-day moving average (MA) of 33.09, below the 50-day MA of 32.10, and above the 200-day MA of 28.23, indicating a bullish trend. The MACD of 0.82 indicates Negative momentum. The RSI at 72.61 is Negative, neither overbought nor oversold. The STOCH value of 90.83 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AROW.

Arrow Financial Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AROW	75 Outperform	$590.28M	13.55	8.49%	3.59%	6.86%	6.11%
BWB	71 Outperform	$547.01M	13.30	8.63%	―	13.96%	25.74%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
ACNB	65 Neutral	$552.06M	14.77	9.18%	2.78%	41.95%	-4.72%
NFBK	60 Neutral	$571.75M	691.41	5.56%	4.38%	6.08%	52.64%
FFIC	54 Neutral	$570.52M	31.28	-5.05%	5.16%	-11.91%	-235.73%
FFWM	49 Neutral	$538.75M	-3.41	-16.22%	―	-6.47%	-75.82%

Arrow Financial Corporate Events

Arrow Financial boosts dividend after record 2025 earnings

On January 28, 2026, Arrow Financial said long-serving director Elizabeth A. Miller will retire from its board after the 2026 annual meeting, ending a tenure that began in 2017. The company also reported record fourth-quarter 2025 net income of $14.0 million, or $0.85 per share, up sharply from $4.5 million and $0.27 a year earlier, and full-year 2025 earnings of $44.0 million, or $2.65 per share, compared with $29.7 million and $1.77 in 2024, driven by strong net interest margin expansion, higher net interest income and improved asset yields alongside lower funding costs. Return on average assets reached 1.24% for the quarter and 1.00% for the year, tangible book value per share grew more than 10% in 2025, and credit quality remained solid with low net charge-offs, underscoring the operational benefits of its recent system integration and strategic execution. Reflecting the stronger performance and signaling confidence in future earnings capacity, the board on January 28, 2026 declared a first-quarter 2026 cash dividend of $0.30 per share, payable on February 25, 2026 to shareholders of record on February 11, 2026, a 3.4% increase from the prior quarterly payout.

The most recent analyst rating on (AROW) stock is a Buy with a $35.00 price target. To see the full list of analyst forecasts on Arrow Financial stock, see the AROW Stock Forecast page.

Arrow Financial Appoints Darrin Jahnel as Director

On November 25, 2025, Arrow Financial Corporation appointed Darrin Jahnel as a director. Jahnel, with over 25 years of experience in technology, is the founder and CEO of Jahnel Group and has been involved in other ventures such as InfoLink and LTI. His appointment does not involve joining any board committees, and there are no related party transactions requiring disclosure.

The most recent analyst rating on (AROW) stock is a Buy with a $33.00 price target. To see the full list of analyst forecasts on Arrow Financial stock, see the AROW Stock Forecast page.

Arrow Financial Announces Preliminary Settlement Approval

Arrow Financial Corporation, a company listed on Nasdaq under the symbol AROW, announced on November 5, 2025, the preliminary approval of a settlement regarding a Shareholder Derivative Complaint filed by Stephen Bull on December 12, 2023. The United States District Court Northern District of New York approved the settlement preliminarily on October 22, 2025, with a final approval hearing set for January 12, 2026. The settlement is not expected to have any material financial impact on Arrow’s operations or financial position.

The most recent analyst rating on (AROW) stock is a Buy with a $30.00 price target. To see the full list of analyst forecasts on Arrow Financial stock, see the AROW Stock Forecast page.

Arrow Financial Reports Strong Q3 2025 Earnings

Arrow Financial Corporation reported a net income of $12.8 million for the third quarter of 2025, with earnings per share of $0.77, marking an increase from the previous quarter. The company declared a quarterly cash dividend of $0.29 per share, payable on November 24, 2025. The quarter saw record net interest income and improvements in net interest margin and return on average assets. The company completed a system conversion and operational merger of its banking subsidiaries in July 2025, incurring non-core unification costs of $600 thousand. With recent Federal Reserve interest rate cuts, Arrow is well-positioned for continued strong performance.

The most recent analyst rating on (AROW) stock is a Hold with a $30.00 price target. To see the full list of analyst forecasts on Arrow Financial stock, see the AROW Stock Forecast page.