Contrasting Orrstown Financial Services (NASDAQ:ORRF) & Horizon Bancorp (NASDAQ:HBNC)

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

Institutional & Insider Ownership

64.5% of Horizon Bancorp shares are owned by institutional investors. Comparatively, 44.3% of Orrstown Financial Services shares are owned by institutional investors. 2.8% of Horizon Bancorp shares are owned by company insiders. Comparatively, 5.3% of Orrstown Financial Services shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Horizon 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
Horizon Bancorp	$324.30 million	2.17	$27.98 million	$0.47	34.28
Orrstown Financial Services	$175.55 million	4.12	$35.66 million	$1.86	20.10

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

Analyst Recommendations

This is a summary of current ratings for Horizon Bancorp and Orrstown Financial Services, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Horizon Bancorp	0	2	2	0	2.50
Orrstown Financial Services	0	0	3	0	3.00

Horizon Bancorp currently has a consensus target price of $16.00, suggesting a potential downside of 0.68%. Orrstown Financial Services has a consensus target price of $35.33, suggesting a potential downside of 5.48%. Given Horizon Bancorp’s higher probable upside, research analysts clearly believe Horizon Bancorp is more favorable than Orrstown Financial Services.

Risk and Volatility

Horizon Bancorp has a beta of 1.03, meaning that its share price is 3% more volatile than the S&P 500. Comparatively, Orrstown Financial Services has a beta of 0.89, meaning that its share price is 11% less volatile than the S&P 500.

Dividends

Horizon Bancorp pays an annual dividend of $0.64 per share and has a dividend yield of 4.0%. Orrstown Financial Services pays an annual dividend of $0.92 per share and has a dividend yield of 2.5%. Horizon Bancorp pays out 136.2% 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 49.5% of its earnings in the form of a dividend. Horizon Bancorp has increased its dividend for 13 consecutive years. Horizon Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Horizon Bancorp	5.89%	8.36%	0.76%
Orrstown Financial Services	6.63%	17.66%	1.52%

Summary

Orrstown Financial Services beats Horizon Bancorp on 10 of the 17 factors compared between the two stocks.

About Horizon Bancorp

Horizon Bancorp, Inc. operates as the bank holding company for Horizon Bank that engages in the provision of commercial and retail banking services. The company offers checking, saving, money market, certificate of deposits, individual retirement accounts, and time deposits, as well as non-interest- and interest-bearing demand deposits. It also provides commercial, residential real estate, mortgage, home equity, auto, personal, business, agricultural, and SBA loans, as well as credit cards. In addition, the company offers corporate and individual trust and agency, investment management, and real estate investment trust services; debit cards; treasury management; online and mobile banking; wealth, retirement, and estate and trust services; and sells various insurance products. It operates through full-service offices in northern and central Indiana and southern and central Michigan. Horizon Bancorp, Inc. was founded in 1873 and is headquartered in Michigan City, Indiana.

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.