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Arrow Financial Corporation (AROW)

Company Dividend Discount ModelIndustry: Banks - RegionalSector: Financial Services

Valuation Snapshot

Stable Growth$23.74 - $38.91$30.50
Multi-Stage$29.56 - $32.31$30.91
Blended Fair Value$30.70
Current Price$28.30
Upside8.50%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS3.76%3.95%1.101.081.050.980.950.920.870.820.790.77
YoY Growth--1.68%3.09%7.04%3.53%3.51%5.68%5.81%3.87%3.09%2.36%
Dividend Yield--4.19%4.43%4.35%3.21%3.11%3.70%2.99%2.88%2.86%3.65%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)34.41
(-) Cash Dividends Paid (M)18.81
(=) Cash Retained (M)15.60
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)6.884.302.58
Cash Retained (M)15.6015.6015.60
(-) Cash Required (M)-6.88-4.30-2.58
(=) Excess Retained (M)8.7211.3013.02
(/) Shares Outstanding (M)16.5916.5916.59
(=) Excess Retained per Share0.530.680.78
LTM Dividend per Share1.131.131.13
(+) Excess Retained per Share0.530.680.78
(=) Adjusted Dividend1.661.811.92
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate1.95%2.95%3.95%
Fair Value$23.74$30.50$38.91
Upside / Downside-16.11%7.78%37.49%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)34.4135.4336.4737.5538.6639.8041.00
Payout Ratio54.67%61.74%68.80%75.87%82.93%90.00%92.50%
Projected Dividends (M)18.8121.8725.0928.4932.0635.8237.92

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate1.95%2.95%3.95%
Year 1 PV (M)19.8620.0520.25
Year 2 PV (M)20.6821.0921.50
Year 3 PV (M)21.3221.9522.60
Year 4 PV (M)21.7822.6523.54
Year 5 PV (M)22.0923.2024.35
PV of Terminal Value (M)384.66403.90423.90
Equity Value (M)490.39512.83536.13
Shares Outstanding (M)16.5916.5916.59
Fair Value$29.56$30.91$32.31
Upside / Downside4.44%9.22%14.18%

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