Pathward Financial (NASDAQ:CASH) versus Orrstown Financial Services (NASDAQ:ORRF) Critical Comparison

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

Valuation and Earnings

This table compares Orrstown Financial Services and Pathward Financial”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	2.32	$80.86 million	$4.45	9.45
Pathward Financial	$851.49 million	1.93	$185.87 million	$7.98	9.91

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

Volatility & Risk

Orrstown Financial Services has a beta of 0.69, suggesting that its stock price is 31% less volatile than the S&P 500. Comparatively, Pathward Financial has a beta of 0.6, suggesting that its stock price is 40% less volatile than the S&P 500.

Dividends

Orrstown Financial Services pays an annual dividend of $1.20 per share and has a dividend yield of 2.9%. Pathward Financial pays an annual dividend of $0.20 per share and has a dividend yield of 0.3%. Orrstown Financial Services pays out 27.0% of its earnings in the form of a dividend. Pathward Financial pays out 2.5% 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. 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, 92.7% of Pathward Financial shares are held by institutional investors. 4.3% of Orrstown Financial Services shares are held by company insiders. Comparatively, 1.4% of Pathward Financial shares are held 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Orrstown Financial Services	24.00%	14.46%	1.56%
Pathward Financial	21.03%	20.61%	2.41%

Analyst Ratings

This is a summary of current recommendations and price targets for Orrstown Financial Services and Pathward Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Orrstown Financial Services	0	3	3	0	2.50
Pathward Financial	0	0	3	0	3.00

Orrstown Financial Services currently has a consensus target price of $44.33, suggesting a potential upside of 5.43%. Pathward Financial has a consensus target price of $101.00, suggesting a potential upside of 27.69%. Given Pathward Financial’s stronger consensus rating and higher probable upside, analysts clearly believe Pathward Financial is more favorable than Orrstown Financial Services.

Summary

Pathward Financial beats Orrstown 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 Pathward Financial

Pathward Financial, Inc. operates as the bank holding company for Pathward, National Association that provides various banking products and services in the United States. The company operates through three segments: Consumer, Commercial, and Corporate Services/Other. It offers demand deposit accounts, savings accounts, and money market savings accounts. The company also provides commercial finance product comprising term lending, asset-based lending, factoring, lease financing, insurance premium finance, government guaranteed lending, and other commercial finance products; consumer credit products; other consumer financing services; tax services, which includes short-term refund advance loans and short-term electronic return originator advance loans; and warehouse financing services. In addition, it issues prepaid cards; and offers payment solutions, such as acceptance, processing, and settlement of credit card and debit card payments. The company was formerly known as Meta Financial Group, Inc. and changed its name to Pathward Financial, Inc. in July 2022. Pathward Financial, Inc. was founded in 1954 and is based in Sioux Falls, South Dakota.