Peoples Bancorp of North Carolina (NASDAQ:PEBK) versus Orrstown Financial Services (NASDAQ:ORRF) Critical Comparison

Peoples Bancorp of North Carolina (NASDAQ:PEBK) and Orrstown Financial Services (NASDAQ:ORRF) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, profitability, risk, institutional ownership, earnings, dividends and analyst recommendations.

Profitability

This table compares Peoples Bancorp of North Carolina and Orrstown Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Peoples Bancorp of North Carolina	18.93%	13.87%	1.26%
Orrstown Financial Services	24.23%	14.41%	1.56%

Analyst Recommendations

This is a summary of current ratings and target prices for Peoples Bancorp of North Carolina and Orrstown Financial Services, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Peoples Bancorp of North Carolina	0	0	0	1	4.00
Orrstown Financial Services	0	2	3	0	2.60

Orrstown Financial Services has a consensus target price of $44.33, suggesting a potential upside of 1.17%. Given Orrstown Financial Services’ higher probable upside, analysts clearly believe Orrstown Financial Services is more favorable than Peoples Bancorp of North Carolina.

Valuation and Earnings

This table compares Peoples Bancorp of North Carolina and Orrstown Financial Services”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Peoples Bancorp of North Carolina	$78.94 million	2.85	$19.83 million	$4.02	10.26
Orrstown Financial Services	$356.05 million	2.42	$80.86 million	$4.49	9.76

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

Volatility and Risk

Peoples Bancorp of North Carolina has a beta of 0.31, suggesting that its share price is 69% less volatile than the S&P 500. Comparatively, Orrstown Financial Services has a beta of 0.7, suggesting that its share price is 30% less volatile than the S&P 500.

Dividends

Peoples Bancorp of North Carolina pays an annual dividend of $0.84 per share and has a dividend yield of 2.0%. Orrstown Financial Services pays an annual dividend of $1.20 per share and has a dividend yield of 2.7%. Peoples Bancorp of North Carolina pays out 20.9% of its earnings in the form of a dividend. Orrstown Financial Services pays out 26.7% 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. Peoples Bancorp of North Carolina has raised its dividend for 1 consecutive years and Orrstown Financial Services has raised 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.

Institutional & Insider Ownership

43.8% of Peoples Bancorp of North Carolina shares are owned by institutional investors. Comparatively, 44.3% of Orrstown Financial Services shares are owned by institutional investors. 14.5% of Peoples Bancorp of North Carolina shares are owned by company insiders. Comparatively, 4.3% of Orrstown Financial Services shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Orrstown Financial Services beats Peoples Bancorp of North Carolina on 12 of the 18 factors compared between the two stocks.

About Peoples Bancorp of North Carolina

Peoples Bancorp of North Carolina, Inc. operates as the bank holding company for Peoples Bank that provides various banking products and services for individuals and small-to medium-sized businesses. It offers checking, savings, money market, and retirement accounts; certificates of deposits; and credit and debit cards. The company also originates commercial real estate loans, commercial loans, construction and land development loans, and residential mortgage loans; and individual taxpayer identification number mortgage loans, as well as agricultural loans. In addition, it provides investment counseling and non-deposit investment products, such as stocks, bonds, mutual funds, tax deferred annuities, and related brokerage services; and real estate appraisal and brokerage services. Further, the company operates as a clearing-house for the provision of appraisal services for community banks; and acquires, manages, and disposes real property, other collateral, and other assets obtained in the ordinary course of collecting debts. Peoples Bancorp of North Carolina, Inc. was founded in 1912 and is headquartered in Newton, North Carolina.

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.