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

Insider & Institutional Ownership

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39.9% of Orrstown Financial Services shares are owned by institutional investors. Comparatively, 53.9% of Lakeland Bancorp shares are owned by institutional investors. 5.7% of Orrstown Financial Services shares are owned by insiders. Comparatively, 6.1% of Lakeland Bancorp shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings for Orrstown Financial Services and Lakeland 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
Lakeland Bancorp 0 1 1 0 2.50

Orrstown Financial Services presently has a consensus price target of $28.00, indicating a potential upside of 12.90%. Lakeland Bancorp has a consensus price target of $24.50, indicating a potential upside of 23.43%. Given Lakeland Bancorp’s higher possible upside, analysts clearly believe Lakeland Bancorp is more favorable than Orrstown Financial Services.

Earnings and Valuation

This table compares Orrstown Financial Services and Lakeland Bancorp’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Orrstown Financial Services $71.40 million 2.92 $8.09 million $1.30 19.08
Lakeland Bancorp $215.64 million 4.37 $52.58 million $1.11 17.88

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

Dividends

Orrstown Financial Services pays an annual dividend of $0.48 per share and has a dividend yield of 1.9%. Lakeland Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 2.0%. Orrstown Financial Services pays out 36.9% of its earnings in the form of a dividend. Lakeland Bancorp pays out 36.0% 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. Lakeland Bancorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Orrstown Financial Services has a beta of 0.41, indicating that its stock price is 59% less volatile than the S&P 500. Comparatively, Lakeland Bancorp has a beta of 0.84, indicating that its stock price is 16% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Orrstown Financial Services 11.33% 7.53% 0.71%
Lakeland Bancorp 24.38% 9.31% 0.99%

Summary

Lakeland Bancorp beats Orrstown Financial Services on 12 of the 14 factors compared between the two stocks.

About Orrstown Financial Services

Orrstown Financial Services, Inc. operates as the holding company for Orrstown Bank that provides commercial banking and trust services in the United States. The company accepts various deposits, including checking, savings, time, demand, and money market deposits. It also offers commercial loans, such as commercial real estate, equipment, working capital, and other commercial purpose loans; consumer loans comprising home equity and other consumer loans, as well as home equity lines of credit; residential mortgage loans; agribusiness loans; acquisition and development loans; municipal loans; and installment and other loans. In addition, the company provides renders services as trustee, executor, administrator, guardian, managing agent, custodian, and investment advisor, as well as provides other fiduciary services under the Orrstown Financial Advisors name; and offers retail brokerage services through a third-party broker/dealer arrangement. Further, it offers investment advisory services through an office in Lancaster County, Pennsylvania. The company provides its banking and bank-related services through branches located in Berks, Cumberland, Dauphin, Franklin, Lancaster, and Perry counties of Pennsylvania, as well as Washington County, Maryland. Orrstown Financial Services, Inc. was founded in 1919 and is headquartered in Shippensburg, Pennsylvania.

About Lakeland Bancorp

Lakeland Bancorp, Inc. operates as the bank holding company for Lakeland Bank that provides financial products and services for individuals and small to medium sized businesses. It offers commercial banking services, including savings, money market, and time accounts, as well as demand deposits; lending solutions, such as short and medium term loans, lines of credit, letters of credit, inventory and accounts receivable financing, real estate construction loans, mortgage loans, small business administration loans, commercial real estate loans, commercial and industrial loans, and equipment financing, as well as merchant credit card services; and Internet banking, mobile banking, wire transfer, night depository, and cash management services. The company also provides consumer banking services, including checking accounts, savings accounts, NOW accounts, money market accounts, certificates of deposit, secured and unsecured loans, consumer installment loans, mortgage loans, and safe deposit services, as well as Internet banking services. In addition, it offers investment and advisory services; and non-deposit products, which include securities brokerage services, including mutual funds and variable annuities. As of January 26, 2018, the company operated 53 branch offices throughout Bergen, Essex, Morris, Ocean, Passaic, Somerset, Sussex, and Union counties in New Jersey; 6 New Jersey regional commercial lending centers in Bernardsville, Jackson, Montville, Newton, Teaneck, and Waldwick; 1 commercial lending center in New York to serve the Hudson Valley region; and 1 commercial loan production office serving Middlesex and Monmouth counties in New Jersey. Lakeland Bancorp, Inc. was founded in 1989 and is headquartered in Oak Ridge, New Jersey.

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