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Arrow Financial Corporation (AROW)

Company Dividend Discount ModelIndustry: Banks - RegionalSector: Financial Services

Valuation Snapshot

Stable Growth$23.68 - $38.77$30.41
Multi-Stage$29.46 - $32.21$30.81
Blended Fair Value$30.61
Current Price$28.30
Upside8.17%
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 Rate9.10%9.10%9.10%
Growth Rate1.95%2.95%3.95%
Fair Value$23.68$30.41$38.77
Upside / Downside-16.32%7.46%37.01%

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 Rate9.10%9.10%9.10%
Growth Rate1.95%2.95%3.95%
Year 1 PV (M)19.8520.0520.24
Year 2 PV (M)20.6821.0821.50
Year 3 PV (M)21.3121.9422.59
Year 4 PV (M)21.7722.6323.53
Year 5 PV (M)22.0723.1824.33
PV of Terminal Value (M)383.21402.37422.30
Equity Value (M)488.88511.25534.47
Shares Outstanding (M)16.5916.5916.59
Fair Value$29.46$30.81$32.21
Upside / Downside4.12%8.88%13.82%

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