Critical Analysis: Orrstown Financial Services (ORRF) vs. Heritage Financial Group (HBOS)

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

Profitability

This table compares Orrstown Financial Services and Heritage Financial Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Orrstown Financial Services 14.58% 7.23% 0.69%
Heritage Financial Group 12.90% 9.62% 0.89%

Dividends

Orrstown Financial Services pays an annual dividend of $0.40 per share and has a dividend yield of 1.6%. Heritage Financial Group does not pay a dividend. Orrstown Financial Services pays out 32.8% of its earnings in the form of a dividend.

Institutional & Insider Ownership

38.0% of Orrstown Financial Services shares are held by institutional investors. 5.4% of Orrstown Financial Services shares are held by 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.

Earnings and Valuation

This table compares Orrstown Financial Services and Heritage Financial Group’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Orrstown Financial Services $58.69 million 3.62 $10.18 million $1.22 20.90
Heritage Financial Group N/A N/A N/A N/A N/A

Orrstown Financial Services has higher revenue and earnings than Heritage Financial Group.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Orrstown Financial Services and Heritage Financial Group, 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
Heritage Financial Group 0 0 0 0 N/A

Orrstown Financial Services presently has a consensus price target of $28.00, indicating a potential upside of 9.80%. Given Orrstown Financial Services’ higher possible upside, research analysts clearly believe Orrstown Financial Services is more favorable than Heritage Financial Group.

Summary

Orrstown Financial Services beats Heritage Financial Group on 7 of the 10 factors compared between the two stocks.

About Orrstown Financial Services

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.

About Heritage Financial Group

Heritage Financial Group, Inc. (Heritage) is a bank holding company. Heritage conducts commercial banking, retail banking, mortgage banking and wealth management activities through its wholly owned subsidiary, HeritageBank of the South (the Bank). As of December 31, 2014, the Bank operated in Georgia, Florida and Alabama through 36 banking locations, 21 mortgage offices, and 5 investment offices. The Bank provides credit based products, deposit accounts, corporate cash management, investment support and other services to commercial and retail clients. As of December 31, 2014, the Company had total assets of $1.7 billion. The Company offers various types of loans, including, residential real estate loans; commercial real estate loans; construction and land loans; commercial and industrial loans, and consumer and other loans.

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