Orrstown Financial Services (NASDAQ: ORRF) and Pacific Continental Corporation (Ore) (NASDAQ:PCBK) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, risk, valuation, dividends, profitability, analyst recommendations and institutional ownership.

Profitability

This table compares Orrstown Financial Services and Pacific Continental Corporation (Ore)’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Orrstown Financial Services 14.58% 7.15% 0.68%
Pacific Continental Corporation (Ore) 22.71% 9.12% 0.99%

Risk & Volatility

Orrstown Financial Services has a beta of 0.68, suggesting that its share price is 32% less volatile than the S&P 500. Comparatively, Pacific Continental Corporation (Ore) has a beta of 0.8, suggesting that its share price is 20% less volatile than the S&P 500.

Institutional and Insider Ownership

37.9% of Orrstown Financial Services shares are held by institutional investors. Comparatively, 67.5% of Pacific Continental Corporation (Ore) shares are held by institutional investors. 5.4% of Orrstown Financial Services shares are held by company insiders. Comparatively, 4.8% of Pacific Continental Corporation (Ore) shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Orrstown Financial Services and Pacific Continental Corporation (Ore)’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Orrstown Financial Services $61.70 million 3.32 $6.62 million $1.22 20.12
Pacific Continental Corporation (Ore) $97.76 6,521,685.76 $19.77 $1.13 24.78

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

Analyst Recommendations

This is a breakdown of current ratings and price targets for Orrstown Financial Services and Pacific Continental Corporation (Ore), as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Orrstown Financial Services 0 1 1 0 2.50
Pacific Continental Corporation (Ore) 0 3 1 0 2.25

Orrstown Financial Services presently has a consensus price target of $28.00, indicating a potential upside of 14.05%. Pacific Continental Corporation (Ore) has a consensus price target of $28.00, indicating a potential upside of 0.00%. Given Orrstown Financial Services’ stronger consensus rating and higher possible upside, research analysts plainly believe Orrstown Financial Services is more favorable than Pacific Continental Corporation (Ore).

Dividends

Orrstown Financial Services pays an annual dividend of $0.48 per share and has a dividend yield of 2.0%. Pacific Continental Corporation (Ore) pays an annual dividend of $0.44 per share and has a dividend yield of 1.6%. Orrstown Financial Services pays out 39.3% of its earnings in the form of a dividend. Pacific Continental Corporation (Ore) pays out 38.9% 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.

Summary

Pacific Continental Corporation (Ore) beats Orrstown Financial Services on 8 of the 15 factors compared between the two stocks.

Orrstown Financial Services Company Profile

Orrstown Financial Services, Inc. is the bank holding company for Orrstown Bank (the Bank). The Bank is engaged in commercial banking and trust business. The Company operates through Community Banking segment. The Bank’s activities involve accepting demand, time and savings deposits, and granting loans. The Bank grants commercial, residential, consumer and agribusiness loans in its market areas of Cumberland, Franklin, Lancaster and Perry Counties in Pennsylvania and in Washington County, Maryland. The Company’s securities available for sale include debt and equity instruments. Through its trust department, the Bank renders services as trustee, executor, administrator, managing agent, custodian, investment advisor and other fiduciary activities authorized by law under the trade name, Orrstown Financial Advisors (OFA). OFA offers retail brokerage services through a third-party broker or dealer arrangement with Cetera Advisor Networks LLC.

Pacific Continental Corporation (Ore) Company Profile

Pacific Continental Corporation is a bank holding company. The Company’s principal business activities are conducted through its subsidiary, Pacific Continental Bank (the Bank), an Oregon state-chartered bank with deposits insured by the Federal Deposit Insurance Corporation. The Bank operates in three primary markets: Eugene, Oregon, Portland; Oregon/Southwest Washington, and Seattle, Washington. As of December 31, 2016, the Bank operated 15 full-service offices in Oregon and Washington and two loan production offices in Washington and Colorado. The Bank primarily operates in large commercial markets and provides banking and related services designed for community-based businesses, nonprofit organizations, professional service providers and banking services for business owners. It provides traditional commercial and consumer banking services, including cash management products for businesses, online banking, safe deposit services debit and automated teller machine cards and others.

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