Contrasting First National (NASDAQ:FXNC) & Oak Ridge Financial Services (OTCMKTS:BKOR)

First National (NASDAQ:FXNC) and Oak Ridge Financial Services (OTCMKTS:BKOR) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, dividends, earnings and profitability.

Dividends

First National pays an annual dividend of $0.62 per share and has a dividend yield of 2.7%. Oak Ridge Financial Services pays an annual dividend of $0.56 per share and has a dividend yield of 2.0%. First National pays out 62.0% of its earnings in the form of a dividend. Oak Ridge Financial Services pays out 22.6% 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. First National has increased its dividend for 10 consecutive years. First National is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent ratings for First National and Oak Ridge Financial Services, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First National	0	3	0	0	2.00
Oak Ridge Financial Services	0	0	0	0	0.00

First National currently has a consensus price target of $28.50, suggesting a potential upside of 24.18%. Given First National’s stronger consensus rating and higher possible upside, analysts plainly believe First National is more favorable than Oak Ridge Financial Services.

Valuation & Earnings

This table compares First National and Oak Ridge Financial Services”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First National	$92.70 million	2.23	$6.97 million	$1.00	22.95
Oak Ridge Financial Services	$41.04 million	1.85	$5.67 million	$2.48	11.15

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

Insider & Institutional Ownership

33.9% of First National shares are held by institutional investors. Comparatively, 4.2% of Oak Ridge Financial Services shares are held by institutional investors. 14.3% of First National shares are held by insiders. Comparatively, 25.6% of Oak Ridge Financial Services shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares First National and Oak Ridge Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First National	7.29%	10.53%	0.89%
Oak Ridge Financial Services	15.83%	N/A	N/A

Volatility & Risk

First National has a beta of 0.55, meaning that its share price is 45% less volatile than the S&P 500. Comparatively, Oak Ridge Financial Services has a beta of 0.19, meaning that its share price is 81% less volatile than the S&P 500.

Summary

First National beats Oak Ridge Financial Services on 12 of the 16 factors compared between the two stocks.

About First National

First National Corporation operates as the bank holding company for First Bank that provides various commercial banking services to small and medium-sized businesses, individuals, estates, local governmental entities, and non-profit organizations in Virginia. The company's deposit products include checking, savings, money market, and individual retirement accounts, as well as certificates of deposit and treasury management solutions. Its loan products comprise construction loans, including residential, land acquisition, and development loans; 1-4 family residential real estate loans; and commercial real estate loans that are secured by commercial real estate, including multi-family residential buildings, office and retail buildings, hotels, industrial buildings, and religious facilities. In addition, the company's loan products include commercial and industrial loans that are secured by business assets, such as accounts receivable, equipment, and inventory; home equity loans; and secured and unsecured consumer loans, such as lines of credit, automobile loans, deposit account loans, and installment and demand loans. Further, it provides wealth management services, including estate planning, investment management of assets, trustee under an agreement, trustee under a will, and estate settlement. Additionally, the company offers title insurance and investment services; and holds other real estate owned and office sites, as well as provides internet and mobile banking, remote deposit capture, and other traditional banking services. First National Corporation was founded in 1907 and is headquartered in Strasburg, Virginia.

About Oak Ridge Financial Services

Oak Ridge Financial Services, Inc. operates as a bank holding company for Bank of Oak Ridge that provides various banking products and services for individuals and businesses. It offers checking, savings, and money market accounts; overdrafts; auto, home equity, mortgage, business term, and business SBA loans; business lines of credit; credit cards; and online and mobile banking products and services. The company also provides health savings accounts, identity theft protection, wealth management, cash management, and remote deposit capture services; and auto, home, small business, renters, life, boat and watercraft, classic car, motorcycle, flood, pet, and umbrella insurance products. It operates through a network of branches in Oak Ridge, Greensboro, and Summerfield, North Carolina. The company was founded in 2000 and is based in Oak Ridge, North Carolina.