Head to Head Survey: Orrstown Financial Services (NASDAQ:ORRF) versus Magyar Bancorp (NASDAQ:MGYR)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Orrstown Financial Services	23.58%	14.96%	1.56%
Magyar Bancorp	18.32%	9.38%	1.10%

Institutional & Insider Ownership

44.3% of Orrstown Financial Services shares are owned by institutional investors. Comparatively, 46.3% of Magyar Bancorp shares are owned by institutional investors. 4.3% of Orrstown Financial Services shares are owned by insiders. Comparatively, 11.1% of Magyar Bancorp shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Volatility & Risk

Orrstown Financial Services has a beta of 0.77, meaning that its share price is 23% less volatile than the S&P 500. Comparatively, Magyar Bancorp has a beta of 0.23, meaning that its share price is 77% less volatile than the S&P 500.

Dividends

Orrstown Financial Services pays an annual dividend of $1.20 per share and has a dividend yield of 3.2%. Magyar Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 2.3%. Orrstown Financial Services pays out 27.5% of its earnings in the form of a dividend. Magyar Bancorp pays out 22.5% 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. Orrstown Financial Services has increased its dividend for 10 consecutive years and Magyar Bancorp has increased its dividend for 3 consecutive years. Orrstown Financial Services is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Orrstown Financial Services and Magyar Bancorp”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Orrstown Financial Services	$356.05 million	2.04	$80.86 million	$4.37	8.45
Magyar Bancorp	$58.42 million	1.94	$9.76 million	$1.78	9.82

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

Analyst Ratings

This is a summary of recent ratings and recommmendations for Orrstown Financial Services and Magyar Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Orrstown Financial Services	0	1	3	0	2.75
Magyar Bancorp	0	1	0	0	2.00

Orrstown Financial Services presently has a consensus price target of $42.00, indicating a potential upside of 13.69%. Given Orrstown Financial Services’ stronger consensus rating and higher probable upside, analysts plainly believe Orrstown Financial Services is more favorable than Magyar Bancorp.

Summary

Orrstown Financial Services beats Magyar Bancorp on 13 of the 17 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 Magyar Bancorp

Magyar Bancorp, Inc. operates as the holding company for Magyar Bank that provides various consumer and commercial banking services to individuals, businesses, and nonprofit organizations in New Jersey, the United States. It accepts various deposit accounts, including demand, savings, NOW, money market, and retirement accounts, as well as certificates of deposit. The company also provides residential mortgage loans, multi-family and commercial real estate mortgage loans, home equity loans and lines of credit, commercial business loans, and construction loans, as well as small business administration loans. In addition, it offers non-deposit investment products and financial planning services, including insurance products, fixed and variable annuities, and retirement planning for individual and commercial customers; and buys, sells, and holds investment securities. The company has branch offices located in New Brunswick, North Brunswick, South Brunswick, Branchburg, Bridgewater, and Edison, New Jersey. Magyar Bancorp, Inc. was founded in 1922 and is headquartered in New Brunswick, New Jersey.