Franklin Financial Services (NASDAQ:FRAF) & Orrstown Financial Services (NASDAQ:ORRF) Head-To-Head Contrast

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Orrstown Financial Services	23.58%	14.75%	1.55%
Franklin Financial Services	17.73%	14.13%	1.05%

Volatility & Risk

Orrstown Financial Services has a beta of 0.7, meaning that its stock price is 30% less volatile than the S&P 500. Comparatively, Franklin Financial Services has a beta of -0.02, meaning that its stock price is 102% less volatile than the S&P 500.

Valuation & Earnings

This table compares Orrstown Financial Services and Franklin Financial Services”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Orrstown Financial Services	$356.05 million	2.31	$80.86 million	$4.37	9.58
Franklin Financial Services	$91.11 million	3.12	$21.23 million	$5.34	11.83

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

Dividends

Orrstown Financial Services pays an annual dividend of $1.20 per share and has a dividend yield of 2.9%. Franklin Financial Services pays an annual dividend of $1.36 per share and has a dividend yield of 2.2%. Orrstown Financial Services pays out 27.5% of its earnings in the form of a dividend. Franklin Financial Services pays out 25.5% 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. Orrstown Financial Services has increased its dividend for 10 consecutive years and Franklin Financial Services has increased its dividend for 1 consecutive years. Orrstown Financial Services is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

44.3% of Orrstown Financial Services shares are held by institutional investors. Comparatively, 24.8% of Franklin Financial Services shares are held by institutional investors. 4.3% of Orrstown Financial Services shares are held by insiders. Comparatively, 5.9% of Franklin Financial Services shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings and target prices for Orrstown Financial Services and Franklin Financial Services, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Orrstown Financial Services	0	3	3	0	2.50
Franklin Financial Services	0	1	1	0	2.50

Orrstown Financial Services presently has a consensus target price of $41.67, suggesting a potential downside of 0.50%. Franklin Financial Services has a consensus target price of $64.00, suggesting a potential upside of 1.28%. Given Franklin Financial Services’ higher possible upside, analysts clearly believe Franklin Financial Services is more favorable than Orrstown Financial Services.

Summary

Orrstown Financial Services beats Franklin Financial Services on 10 of the 16 factors compared between the two stocks.

About Orrstown Financial Services

Orrstown Financial Services, Inc. operates as the financial holding company for Orrstown Bank that provides commercial banking and financial advisory services to retail, commercial, non-profit, and government clients in the United States. It accepts various deposits, including checking, savings, time, demand, and money market deposits, as well as certificates of deposit. The company also offers commercial loans, such as commercial real estate, equipment, construction, working capital, and other commercial purpose loans, as well as industrial loans; consumer loans, such as home equity and other consumer loans, as well as home equity lines of credit; residential mortgage loans; acquisition and development loans; municipal loans; and installment and other loans. In addition, it provides renders services as trustee, executor, administrator, guardian, managing agent, custodian, and investment advisor, as well as other fiduciary services under the Orrstown Financial Advisors name; and retail brokerage services through a third-party broker/dealer arrangement. Further, the company offers fiduciary, investment advisory, insurance, and brokerage services. Orrstown Financial Services, Inc. was founded in 1919 and is headquartered in Shippensburg, Pennsylvania.

About Franklin Financial Services

Franklin Financial Services Corporation operates as the bank holding company for Farmers and Merchants Trust Company of Chambersburg that provides commercial, retail banking, and trust services to businesses, individuals, governmental entities, and non-profit organizations in Pennsylvania. It offers various deposit products, including checking, savings, money management, and time deposit accounts, as well as demand deposits. The company also provides commercial real estate, construction and land development, commercial and industrial, and residential mortgage loans, as well as installment and revolving loans; consumer loans comprising unsecured personal lines of credit and installment loans; and secured and unsecured commercial and industrial loans, including accounts receivable and inventory financing, and commercial equipment financing. In addition, it offers various investment and trust services comprising estate planning and administration, corporate and personal trust fund management, pension, and profit sharing and other employee benefit funds management services, and custodial services, as well as non-trust related investment services; sells mutual funds, annuities, and insurance products; and offers safe deposit, pension, and fiduciary services. Further, the company engages in non-bank investment activities, such as venture capital investments. The company was founded in 1906 and is headquartered in Chambersburg, Pennsylvania.