Orrstown Financial Services (NASDAQ:ORRF) & Isabella Bank (OTCMKTS:ISBA) Financial Analysis

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

Institutional and Insider Ownership

42.4% of Orrstown Financial Services shares are held by institutional investors. 4.1% of Orrstown Financial Services shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Isabella Bank pays an annual dividend of $1.08 per share and has a dividend yield of 4.1%. Orrstown Financial Services pays an annual dividend of $0.76 per share and has a dividend yield of 3.2%. Isabella Bank pays out 80.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Orrstown Financial Services pays out 30.2% of its earnings in the form of a dividend. Orrstown Financial Services has increased its dividend for 1 consecutive years.

Profitability

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

Net Margins Return on Equity Return on Assets
Isabella Bank 17.72% 6.23% 0.68%
Orrstown Financial Services 26.90% 14.14% 1.24%

Analyst Recommendations

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Isabella Bank 0 0 0 0 N/A
Orrstown Financial Services 0 1 0 0 2.00

Orrstown Financial Services has a consensus target price of $13.50, suggesting a potential downside of 42.77%. Given Orrstown Financial Services’ higher possible upside, analysts plainly believe Orrstown Financial Services is more favorable than Isabella Bank.

Earnings & Valuation

This table compares Isabella Bank and Orrstown Financial Services’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Isabella Bank $78.60 million 2.68 $10.89 million $1.34 19.77
Orrstown Financial Services $127.94 million 2.08 $26.46 million $2.52 9.36

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

Summary

Orrstown Financial Services beats Isabella Bank on 11 of the 14 factors compared between the two stocks.

Isabella Bank Company Profile

Isabella Bank Corp. is a holding company, which engages in the provision of financial services through its subsidiary, Isabella Bank. It offers checking accounts, savings accounts, certificates of deposit, direct deposits, cash management services, mobile and internet banking, electronic bill pay services, and automated teller machines. The firm also provides full services investment management, trust, and estate services. The company was founded in September 1988 and is headquartered in Mount Pleasant, MI.

Orrstown Financial Services Company Profile

Orrstown Financial Services, Inc. is a holding company, which engages in the provision of consumer and business financial services. It also offers commercial banking and trust business services which involves accepting demand, time and savings deposits, and granting loans. The company was founded on November 17, 1987 and is headquartered in Shippensburg, PA.

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