Critical Survey: Live Oak Bancshares (LOB) vs. Orrstown Financial Services, Inc. Common Stock (ORRF)

Live Oak Bancshares (NASDAQ: ORRF) and Orrstown Financial Services, Inc. Common Stock (NASDAQ:ORRF) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, earnings, analyst recommendations, institutional ownership, valuation, risk and profitability.

Insider and Institutional Ownership

44.3% of Live Oak Bancshares shares are held by institutional investors. Comparatively, 41.2% of Orrstown Financial Services, Inc. Common Stock shares are held by institutional investors. 25.7% of Live Oak Bancshares shares are held by company insiders. Comparatively, 5.7% of Orrstown Financial Services, Inc. Common Stock shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Live Oak Bancshares and Orrstown Financial Services, Inc. Common Stock’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Live Oak Bancshares $276.39 million 4.12 $100.49 million $1.25 22.68
Orrstown Financial Services, Inc. Common Stock $71.40 million 2.86 $8.09 million $1.30 18.73

Live Oak Bancshares has higher revenue and earnings than Orrstown Financial Services, Inc. Common Stock. Orrstown Financial Services, Inc. Common Stock is trading at a lower price-to-earnings ratio than Live Oak Bancshares, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Live Oak Bancshares has a beta of 0.13, suggesting that its share price is 87% less volatile than the S&P 500. Comparatively, Orrstown Financial Services, Inc. Common Stock has a beta of 0.22, suggesting that its share price is 78% less volatile than the S&P 500.

Dividends

Live Oak Bancshares pays an annual dividend of $0.12 per share and has a dividend yield of 0.4%. Orrstown Financial Services, Inc. Common Stock pays an annual dividend of $0.52 per share and has a dividend yield of 2.1%. Live Oak Bancshares pays out 9.6% of its earnings in the form of a dividend. Orrstown Financial Services, Inc. Common Stock pays out 40.0% 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. Live Oak Bancshares has raised its dividend for 2 consecutive years and Orrstown Financial Services, Inc. Common Stock has raised its dividend for 2 consecutive years.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Live Oak Bancshares and Orrstown Financial Services, Inc. Common Stock, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Live Oak Bancshares 0 2 1 0 2.33
Orrstown Financial Services, Inc. Common Stock 0 1 2 0 2.67

Live Oak Bancshares currently has a consensus price target of $28.00, indicating a potential downside of 1.23%. Orrstown Financial Services, Inc. Common Stock has a consensus price target of $34.00, indicating a potential upside of 39.63%. Given Orrstown Financial Services, Inc. Common Stock’s stronger consensus rating and higher possible upside, analysts clearly believe Orrstown Financial Services, Inc. Common Stock is more favorable than Live Oak Bancshares.

Profitability

This table compares Live Oak Bancshares and Orrstown Financial Services, Inc. Common Stock’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Live Oak Bancshares 35.16% 13.41% 1.90%
Orrstown Financial Services, Inc. Common Stock 13.36% 9.05% 0.82%

Summary

Live Oak Bancshares beats Orrstown Financial Services, Inc. Common Stock on 10 of the 16 factors compared between the two stocks.

Live Oak Bancshares Company Profile

Live Oak Bancshares, Inc. operates as the bank holding company for the Live Oak Banking Company that provides various commercial banking products and services to individuals and businesses in North Carolina. The company accepts various deposit products, including noninterest-bearing demand, interest-bearing checking, money market, saving, and time deposits. It also offers commercial and industrial loans; construction and development loans; owner occupied and non-owner occupied collateral commercial real estate loans; and commercial land loans. The company was founded in 2008 and is headquartered in Wilmington, North Carolina.

Orrstown Financial Services, Inc. Common Stock Company Profile

Orrstown Financial Services, Inc. operates as the holding company for Orrstown Bank that provides commercial banking and trust services in the United States. The company accepts various deposits, including checking, savings, time, demand, and money market deposits. It also offers commercial loans, such as commercial real estate, equipment, working capital, and other commercial purpose loans; consumer loans comprising home equity and other consumer loans, as well as home equity lines of credit; residential mortgage loans; agribusiness loans; acquisition and development loans; municipal loans; and installment and other loans. In addition, the company provides renders services as trustee, executor, administrator, guardian, managing agent, custodian, and investment advisor, as well as provides other fiduciary services under the Orrstown Financial Advisors name; and offers retail brokerage services through a third-party broker/dealer arrangement. Further, it offers investment advisory services through an office in Lancaster County, Pennsylvania. The company provides its banking and bank-related services through branches located in Berks, Cumberland, Dauphin, Franklin, Lancaster, and Perry counties of Pennsylvania, as well as Washington County, Maryland. Orrstown Financial Services, Inc. was founded in 1919 and is headquartered in Shippensburg, Pennsylvania.

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