Orrstown Financial Services (ORRF) and Peapack-Gladstone Financial (PGC) Critical Review

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

Volatility & Risk

Orrstown Financial Services has a beta of 0.67, meaning that its share price is 33% less volatile than the S&P 500. Comparatively, Peapack-Gladstone Financial has a beta of 0.99, meaning that its share price is 1% less volatile than the S&P 500.

Dividends

Orrstown Financial Services pays an annual dividend of $0.48 per share and has a dividend yield of 1.8%. Peapack-Gladstone Financial pays an annual dividend of $0.20 per share and has a dividend yield of 0.5%. Orrstown Financial Services pays out 39.3% of its earnings in the form of a dividend. Peapack-Gladstone Financial pays out 10.5% 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.

Valuation and Earnings

This table compares Orrstown Financial Services and Peapack-Gladstone Financial’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 $61.70 million 3.53 $6.62 million $1.22 21.35
Peapack-Gladstone Financial $145.97 million 4.61 $26.47 million $1.90 19.41

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

Analyst Ratings

This is a summary of recent recommendations and price targets for Orrstown Financial Services and Peapack-Gladstone Financial, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Orrstown Financial Services 0 1 1 0 2.50
Peapack-Gladstone Financial 0 0 2 0 3.00

Orrstown Financial Services presently has a consensus price target of $28.00, indicating a potential upside of 7.49%. Peapack-Gladstone Financial has a consensus price target of $35.75, indicating a potential downside of 3.06%. Given Orrstown Financial Services’ higher possible upside, analysts plainly believe Orrstown Financial Services is more favorable than Peapack-Gladstone Financial.

Profitability

This table compares Orrstown Financial Services and Peapack-Gladstone Financial’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%
Peapack-Gladstone Financial 20.36% 9.54% 0.83%

Institutional & Insider Ownership

39.6% of Orrstown Financial Services shares are held by institutional investors. Comparatively, 69.6% of Peapack-Gladstone Financial shares are held by institutional investors. 5.4% of Orrstown Financial Services shares are held by company insiders. Comparatively, 5.9% of Peapack-Gladstone Financial shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

Peapack-Gladstone Financial beats Orrstown Financial Services on 13 of the 16 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.

Peapack-Gladstone Financial Company Profile

Peapack-Gladstone Financial Corporation is a bank holding company. The Company’s principal subsidiary is Peapack-Gladstone Bank (the Bank), which is a state chartered commercial bank. The Company operates through two segments: Banking and Private Wealth Management Division. The Banking segment includes commercial, commercial real estate, multifamily, residential and consumer lending activities; deposit generation; operation of automated teller machines (ATMs); telephone and Internet banking services; merchant credit card services, and customer support sales. The Private Wealth Management Division includes asset management services provided for individuals and institutions; personal trust services, including services as executor, trustee, administrator, custodian and guardian; corporate trust services, including services as trustee for pension and profit sharing plans, and other financial planning and advisory services.

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