Head to Head Review: Orrstown Financial Services (NASDAQ:ORRF) & Ohio Valley Banc (NASDAQ:OVBC)

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

Analyst Recommendations

This is a summary of current ratings for Orrstown Financial Services and Ohio Valley Banc, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Orrstown Financial Services	0	1	2	0	2.67
Ohio Valley Banc	0	0	0	0	N/A

Orrstown Financial Services presently has a consensus target price of $30.00, suggesting a potential upside of 19.09%. Given Orrstown Financial Services’ higher possible upside, analysts clearly believe Orrstown Financial Services is more favorable than Ohio Valley Banc.

Volatility & Risk

Orrstown Financial Services has a beta of 0.9, meaning that its share price is 10% less volatile than the S&P 500. Comparatively, Ohio Valley Banc has a beta of 0.09, meaning that its share price is 91% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Orrstown Financial Services	18.99%	14.31%	1.19%
Ohio Valley Banc	14.70%	8.16%	0.87%

Dividends

Orrstown Financial Services pays an annual dividend of $0.80 per share and has a dividend yield of 3.2%. Ohio Valley Banc pays an annual dividend of $0.88 per share and has a dividend yield of 4.2%. Orrstown Financial Services pays out 23.9% of its earnings in the form of a dividend. Ohio Valley Banc pays out 36.5% 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. Ohio Valley Banc has increased its dividend for 1 consecutive years. Ohio Valley Banc is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares Orrstown Financial Services and Ohio Valley Banc’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Orrstown Financial Services	$175.55 million	1.54	$35.66 million	$3.35	7.52
Ohio Valley Banc	$74.49 million	1.33	$12.63 million	$2.41	8.61

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

Institutional & Insider Ownership

44.3% of Orrstown Financial Services shares are held by institutional investors. Comparatively, 22.1% of Ohio Valley Banc shares are held by institutional investors. 5.3% of Orrstown Financial Services shares are held by company insiders. Comparatively, 5.3% of Ohio Valley Banc 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.

Summary

Orrstown Financial Services beats Ohio Valley Banc on 13 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 Ohio Valley Banc

Ohio Valley Banc Corp. operates as the bank holding company for The Ohio Valley Bank Company that provides commercial and consumer banking products and services. The company operates in two segments, Banking and Consumer Finance. It accepts various deposit products, including checking, savings, time, and money market accounts, as well as individual retirement accounts, demand deposits, NOW accounts, and certificates of deposit. The company also provides various residential real estate loans, including one-to four-family residential mortgages; commercial loans for securing equipment, inventory, stock, commercial real estate, and rental property; and consumer loans secured by automobiles, mobile homes, recreational vehicles, and other personal property, as well as personal loans, unsecured credit card receivables, floor plan and student loans, and construction loans. In addition, it offers safe deposit box, wire transfer, credit card, home equity loans, and Internet banking services; and financial management online services, such as cash management and news updates related to repossession auctions, current rates, and general bank news. Further, the company provides automatic teller machines (ATMs), consumer finance, seasonal tax preparation, commercial property, and various liability insurance services, as well as trust and online-only consumer direct mortgage services. The company owns and operates ATMs, including off-site ATMs. It operates offices in Ohio and West Virginia. The company was founded in 1872 and is based in Gallipolis, Ohio.