Reviewing Orrstown Financial Services (NASDAQ:ORRF) & Pathward Financial (NASDAQ:CASH)

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

Insider and Institutional Ownership

92.7% of Pathward Financial shares are owned by institutional investors. Comparatively, 44.3% of Orrstown Financial Services shares are owned by institutional investors. 1.4% of Pathward Financial shares are owned by insiders. Comparatively, 4.3% of Orrstown Financial Services shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Volatility and Risk

Pathward Financial has a beta of 0.6, meaning that its stock price is 40% less volatile than the S&P 500. Comparatively, Orrstown Financial Services has a beta of 0.69, meaning that its stock price is 31% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Pathward Financial and Orrstown Financial Services, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pathward Financial	0	0	3	0	3.00
Orrstown Financial Services	0	3	3	0	2.50

Pathward Financial presently has a consensus price target of $101.00, suggesting a potential upside of 27.69%. Orrstown Financial Services has a consensus price target of $44.33, suggesting a potential upside of 5.43%. Given Pathward Financial’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Pathward Financial is more favorable than Orrstown Financial Services.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Pathward Financial	21.03%	20.61%	2.41%
Orrstown Financial Services	24.00%	14.46%	1.56%

Dividends

Pathward Financial pays an annual dividend of $0.20 per share and has a dividend yield of 0.3%. Orrstown Financial Services pays an annual dividend of $1.20 per share and has a dividend yield of 2.9%. Pathward Financial pays out 2.5% of its earnings in the form of a dividend. Orrstown Financial Services pays out 27.0% 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. Orrstown Financial Services has increased its dividend for 10 consecutive years. Orrstown Financial Services is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares Pathward Financial 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
Pathward Financial	$851.49 million	1.93	$185.87 million	$7.98	9.91
Orrstown Financial Services	$356.05 million	2.32	$80.86 million	$4.45	9.45

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

Summary

Pathward Financial beats Orrstown Financial Services on 10 of the 16 factors compared between the two stocks.

About Pathward Financial

Pathward Financial, Inc. operates as the bank holding company for Pathward, National Association that provides various banking products and services in the United States. The company operates through three segments: Consumer, Commercial, and Corporate Services/Other. It offers demand deposit accounts, savings accounts, and money market savings accounts. The company also provides commercial finance product comprising term lending, asset-based lending, factoring, lease financing, insurance premium finance, government guaranteed lending, and other commercial finance products; consumer credit products; other consumer financing services; tax services, which includes short-term refund advance loans and short-term electronic return originator advance loans; and warehouse financing services. In addition, it issues prepaid cards; and offers payment solutions, such as acceptance, processing, and settlement of credit card and debit card payments. The company was formerly known as Meta Financial Group, Inc. and changed its name to Pathward Financial, Inc. in July 2022. Pathward Financial, Inc. was founded in 1954 and is based in Sioux Falls, South Dakota.

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.