Orrstown Financial Services (NASDAQ: ORRF) and Hope Bancorp (NASDAQ:HOPE) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, profitability, institutional ownership, risk, dividends, valuation and earnings.

Volatility & Risk

Orrstown Financial Services has a beta of 0.67, meaning that its share price is 33% less volatile than the S&P 500. Comparatively, Hope Bancorp has a beta of 1.39, meaning that its share price is 39% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Orrstown Financial Services and Hope Bancorp, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Orrstown Financial Services 0 1 1 0 2.50
Hope Bancorp 0 5 1 0 2.17

Orrstown Financial Services currently has a consensus price target of $28.00, indicating a potential upside of 13.36%. Hope Bancorp has a consensus price target of $19.30, indicating a potential upside of 6.16%. Given Orrstown Financial Services’ stronger consensus rating and higher probable upside, analysts clearly believe Orrstown Financial Services is more favorable than Hope Bancorp.

Profitability

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

Net Margins Return on Equity Return on Assets
Orrstown Financial Services 14.58% 7.15% 0.68%
Hope Bancorp 26.16% 8.74% 1.21%

Dividends

Orrstown Financial Services pays an annual dividend of $0.48 per share and has a dividend yield of 1.9%. Hope Bancorp pays an annual dividend of $0.52 per share and has a dividend yield of 2.9%. Orrstown Financial Services pays out 39.3% of its earnings in the form of a dividend. Hope Bancorp pays out 43.3% 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.

Insider and Institutional Ownership

39.6% of Orrstown Financial Services shares are owned by institutional investors. Comparatively, 80.6% of Hope Bancorp shares are owned by institutional investors. 5.4% of Orrstown Financial Services shares are owned by company insiders. Comparatively, 5.2% of Hope Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Orrstown Financial Services $61.70 million 3.34 $6.62 million $1.22 20.25
Hope Bancorp $473.75 million 5.20 $113.74 million $1.20 15.15

Hope Bancorp has higher revenue and earnings than Orrstown Financial Services. Hope 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

Hope Bancorp beats Orrstown Financial Services on 9 of the 15 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.

Hope Bancorp Company Profile

Hope Bancorp, Inc., formerly BBCN Bancorp, Inc., is the holding company of Bank of Hope. Bank of Hope is the regional Korean-American bank in the United States. Bank of Hope operates approximately 85 full-service branches in California, Washington, Texas, Illinois, New York, New Jersey, Virginia, Georgia and Alabama. The Bank also operates small business administration (SBA) loan production offices in Seattle, Denver, Dallas, Atlanta, Northern California, Annandale, Virginia, Portland, Oregon and Fremont, California; residential mortgage loan production offices in California, and a representative office in Seoul, Korea. Bank of Hope specializes in business banking products for small and medium-sized businesses, with an emphasis in commercial real estate and commercial lending, SBA lending and international trade financing. Bank of Hope is a California-chartered bank, and its deposits are insured by the Federal Deposit Insurance Corporation (FDIC).

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