Head to Head Analysis: Orrstown Financial Services (NASDAQ:ORRF) & Hope Bancorp (NASDAQ:HOPE)

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

Institutional and Insider Ownership

84.0% of Hope Bancorp shares are owned by institutional investors. Comparatively, 44.3% of Orrstown Financial Services shares are owned by institutional investors. 2.3% of Hope Bancorp 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 large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Hope Bancorp and Orrstown Financial Services, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hope Bancorp	0	4	2	0	2.33
Orrstown Financial Services	0	2	3	0	2.60

Hope Bancorp presently has a consensus price target of $14.50, suggesting a potential upside of 9.77%. Orrstown Financial Services has a consensus price target of $44.33, suggesting a potential upside of 0.94%. Given Hope Bancorp’s higher possible upside, equities research analysts clearly believe Hope Bancorp is more favorable than Orrstown Financial Services.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Hope Bancorp	12.90%	5.97%	0.72%
Orrstown Financial Services	24.23%	14.41%	1.56%

Earnings and Valuation

This table compares Hope Bancorp 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
Hope Bancorp	$967.63 million	1.75	$61.59 million	$1.00	13.21
Orrstown Financial Services	$356.05 million	2.43	$80.86 million	$4.49	9.78

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

Dividends

Hope Bancorp pays an annual dividend of $0.56 per share and has a dividend yield of 4.2%. Orrstown Financial Services pays an annual dividend of $1.20 per share and has a dividend yield of 2.7%. Hope Bancorp pays out 56.0% 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. Orrstown Financial Services has increased its dividend for 10 consecutive years.

Volatility and Risk

Hope Bancorp has a beta of 0.87, indicating that its share price is 13% less volatile than the S&P 500. Comparatively, Orrstown Financial Services has a beta of 0.69, indicating that its share price is 31% less volatile than the S&P 500.

Summary

Orrstown Financial Services beats Hope Bancorp on 11 of the 17 factors compared between the two stocks.

About Hope Bancorp

Hope Bancorp, Inc. operates as the bank holding company for Bank of Hope that provides retail and commercial banking services for businesses and individuals in the United States. It accepts personal and business checking, money market, savings, time deposit, and individual retirement accounts. The company also offers loans comprising commercial and industrial loans to businesses for various purposes, such as working capital, purchasing inventory, debt refinancing, business acquisitions, international trade finance, other business-related financing, and loans syndication services; commercial real estate loans; residential mortgage loans; small business administration loans; and consumer loans, such as single-family mortgage, home equity, automobile, credit card, and personal loans. In addition, it provides internet banking and bill-pay, remote deposit capture, lock box, and ACH origination services; treasury management services; foreign currency exchange transactions; interest rate contracts and wealth management services; automated teller machine services; and engages in investment activities. Hope Bancorp, Inc. was founded in 1986 and is headquartered in Los Angeles, California.

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.