Orrstown Financial Services (NASDAQ: ORRF) and Select Bancorp (NASDAQ:SLCT) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, dividends, valuation, profitability, institutional ownership, risk and analyst recommendations.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Orrstown Financial Services and Select Bancorp, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Orrstown Financial Services 0 1 1 0 2.50
Select Bancorp 0 1 0 0 2.00

Orrstown Financial Services currently has a consensus target price of $28.00, indicating a potential upside of 11.33%. Select Bancorp has a consensus target price of $13.00, indicating a potential upside of 13.44%. Given Select Bancorp’s higher probable upside, analysts plainly believe Select Bancorp is more favorable than Orrstown Financial Services.

Institutional & Insider Ownership

37.9% of Orrstown Financial Services shares are owned by institutional investors. Comparatively, 14.7% of Select Bancorp shares are owned by institutional investors. 5.4% of Orrstown Financial Services shares are owned by company insiders. Comparatively, 14.2% of Select Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Orrstown Financial Services pays an annual dividend of $0.40 per share and has a dividend yield of 1.6%. Select Bancorp does not pay a dividend. Orrstown Financial Services pays out 37.7% of its earnings in the form of a dividend.

Profitability

This table compares Orrstown Financial Services and Select Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Orrstown Financial Services 13.25% 6.25% 0.61%
Select Bancorp 17.31% 6.44% 0.78%

Risk & Volatility

Orrstown Financial Services has a beta of 0.89, indicating that its share price is 11% less volatile than the S&P 500. Comparatively, Select Bancorp has a beta of 0.33, indicating that its share price is 67% less volatile than the S&P 500.

Valuation & Earnings

This table compares Orrstown Financial Services and Select Bancorp’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Orrstown Financial Services $58.69 million 3.58 $8.84 million $1.06 23.73
Select Bancorp $33.23 million 4.02 $6.76 million $0.58 19.76

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

Summary

Orrstown Financial Services beats Select Bancorp on 9 of the 16 factors compared between the two stocks.

Orrstown Financial Services Company Profile

Orrstown Financial Services, Inc. is the bank holding company for Orrstown Bank (the Bank). The Bank is engaged in commercial banking and trust business. The Company operates through Community Banking segment. The Bank’s activities involve accepting demand, time and savings deposits, and granting loans. The Bank grants commercial, residential, consumer and agribusiness loans in its market areas of Cumberland, Franklin, Lancaster and Perry Counties in Pennsylvania and in Washington County, Maryland. The Company’s securities available for sale include debt and equity instruments. Through its trust department, the Bank renders services as trustee, executor, administrator, managing agent, custodian, investment advisor and other fiduciary activities authorized by law under the trade name, Orrstown Financial Advisors (OFA). OFA offers retail brokerage services through a third-party broker or dealer arrangement with Cetera Advisor Networks LLC.

Select Bancorp Company Profile

Select Bancorp, Inc. is the bank holding company for Select Bank & Trust Company (the Bank). The Bank is a commercial bank. The Bank provides commercial and retail financial services to customers located in its market areas. The Bank offers a range of banking services, including checking and savings accounts, commercial, consumer, mortgage and personal loans, and other associated financial services. The Bank’s lending activities are oriented to the consumer/retail customer, as well as to the small-to-medium sized businesses located in central and eastern North Carolina. The Bank offers commercial, consumer and mortgage lending products. It originates construction loans for the purpose of acquisition, development and construction of both residential and commercial properties (ADC loans). The Bank’s deposits include savings, negotiable order of withdrawal (NOW) account and money market deposits, time deposits and non-interest-bearing deposits.

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