Head to Head Comparison: Orrstown Financial Services (NASDAQ:ORRF) and Wells Fargo & Company (NYSE:WFC)

Wells Fargo & Company (NYSE:WFC) and Orrstown Financial Services (NASDAQ:ORRF) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, dividends, valuation, profitability, institutional ownership, earnings and analyst recommendations.

Institutional and Insider Ownership

75.9% of Wells Fargo & Company shares are owned by institutional investors. Comparatively, 44.3% of Orrstown Financial Services shares are owned by institutional investors. 0.1% of Wells Fargo & Company shares are owned by company insiders. Comparatively, 4.3% of Orrstown Financial Services shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Wells Fargo & Company and Orrstown Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Wells Fargo & Company	17.55%	13.85%	1.06%
Orrstown Financial Services	24.00%	14.46%	1.56%

Dividends

Wells Fargo & Company pays an annual dividend of $2.00 per share and has a dividend yield of 2.5%. Orrstown Financial Services pays an annual dividend of $1.20 per share and has a dividend yield of 2.9%. Wells Fargo & Company pays out 29.1% 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. Wells Fargo & Company has raised its dividend for 4 consecutive years and Orrstown Financial Services has raised 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.

Analyst Ratings

This is a breakdown of current ratings and target prices for Wells Fargo & Company and Orrstown Financial Services, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Wells Fargo & Company	0	7	16	2	2.80
Orrstown Financial Services	0	2	3	0	2.60

Wells Fargo & Company currently has a consensus price target of $99.47, suggesting a potential upside of 23.08%. Orrstown Financial Services has a consensus price target of $44.33, suggesting a potential upside of 7.66%. Given Wells Fargo & Company’s stronger consensus rating and higher possible upside, equities analysts clearly believe Wells Fargo & Company is more favorable than Orrstown Financial Services.

Risk and Volatility

Wells Fargo & Company has a beta of 0.96, indicating that its stock price is 4% less volatile than the S&P 500. Comparatively, Orrstown Financial Services has a beta of 0.69, indicating that its stock price is 31% less volatile than the S&P 500.

Earnings and Valuation

This table compares Wells Fargo & Company 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
Wells Fargo & Company	$123.53 billion	1.98	$21.34 billion	$6.88	11.75
Orrstown Financial Services	$252.33 million	3.21	$80.86 million	$4.45	9.25

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

Summary

Wells Fargo & Company beats Orrstown Financial Services on 10 of the 18 factors compared between the two stocks.

About Wells Fargo & Company

Wells Fargo & Co. is a diversified and community-based financial services company, which engages in the provision of banking, insurance, investments, mortgage, and consumer and commercial finance products and services. It operates through the following segments: Consumer Banking and Lending, Commercial Banking, Corporate and Investment Banking, and Wealth and Investment Management. The Consumer Banking and Lending segment offers consumer and small business banking, home lending, credit cards, auto, and personal lending. The Commercial Banking segment provides banking and credit products across industry sectors and municipalities, secured lending and lease products, and treasury management. The Corporate and Investment Banking segment is composed of corporate banking, investment banking, treasury management, commercial real estate lending and servicing, and equity and fixed income solutions, as well as sales, trading, and research capabilities. The Wealth and Investment Management segment refers to personalized wealth management, brokerage, financial planning, lending, private banking, trust, and fiduciary products and services. The company was founded by Henry Wells and William G. Fargo on March 18, 1852 and is headquartered in San Francisco, CA.

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.