Reviewing Western Alliance Bancorporation (NYSE:WAL) and Orrstown Financial Services (NASDAQ:ORRF)

Western Alliance Bancorporation (NYSE:WALGet Rating) and Orrstown Financial Services (NASDAQ:ORRFGet Rating) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, risk, profitability, analyst recommendations, valuation, earnings and dividends.

Profitability

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

Net Margins Return on Equity Return on Assets
Western Alliance Bancorporation 41.03% 21.77% 1.76%
Orrstown Financial Services 25.31% 11.55% 1.08%

Volatility and Risk

Western Alliance Bancorporation has a beta of 1.44, suggesting that its stock price is 44% more volatile than the S&P 500. Comparatively, Orrstown Financial Services has a beta of 0.85, suggesting that its stock price is 15% less volatile than the S&P 500.

Earnings and Valuation

This table compares Western Alliance Bancorporation and Orrstown Financial Services’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Western Alliance Bancorporation $2.06 billion 3.85 $899.20 million $8.99 8.15
Orrstown Financial Services $122.85 million 2.16 $32.88 million $2.80 8.49

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

Analyst Recommendations

This is a summary of current ratings and target prices for Western Alliance Bancorporation and Orrstown Financial Services, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Western Alliance Bancorporation 0 0 7 0 3.00
Orrstown Financial Services 0 0 1 0 3.00

Western Alliance Bancorporation currently has a consensus target price of $126.86, suggesting a potential upside of 73.11%. Given Western Alliance Bancorporation’s higher possible upside, analysts plainly believe Western Alliance Bancorporation is more favorable than Orrstown Financial Services.

Insider and Institutional Ownership

87.2% of Western Alliance Bancorporation shares are held by institutional investors. Comparatively, 43.8% of Orrstown Financial Services shares are held by institutional investors. 2.8% of Western Alliance Bancorporation shares are held by insiders. Comparatively, 4.8% of Orrstown Financial Services shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Dividends

Western Alliance Bancorporation pays an annual dividend of $1.40 per share and has a dividend yield of 1.9%. Orrstown Financial Services pays an annual dividend of $0.76 per share and has a dividend yield of 3.2%. Western Alliance Bancorporation pays out 15.6% of its earnings in the form of a dividend. Orrstown Financial Services pays out 27.1% 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. Western Alliance Bancorporation has raised its dividend for 1 consecutive years and Orrstown Financial Services has raised its dividend for 6 consecutive years. Orrstown Financial Services is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Western Alliance Bancorporation beats Orrstown Financial Services on 12 of the 16 factors compared between the two stocks.

Western Alliance Bancorporation Company Profile (Get Rating)

Western Alliance Bancorporation operates as the bank holding company for Western Alliance Bank that provides various banking products and related services primarily in Arizona, California, and Nevada. It operates in Commercial, Consumer Related, and Corporate & Other segments. The company offers deposit products, including checking, savings, and money market accounts, as well as fixed-rate and fixed maturity certificates of deposit accounts; and treasury management and residential mortgage products and services. It also offers commercial and industrial loan products, such as working capital lines of credit, loans to technology companies, inventory and accounts receivable lines, mortgage warehouse lines, equipment loans and leases, and other commercial loans; commercial real estate loans, which are secured by multi-family residential properties, professional offices, industrial facilities, retail centers, hotels, and other commercial properties; construction and land development loans for single family and multi-family residential projects, industrial/warehouse properties, office buildings, retail centers, medical office facilities, and residential lot developments; and consumer loans. In addition, the company provides other financial services, such as internet banking, wire transfers, electronic bill payment and presentment, lock box services, courier, and cash management services. Further, it holds certain investment securities, municipal and non-profit loans, and leases; invests primarily in low-income housing tax credits and small business investment corporations; and holds certain real estate loans and related securities. The company operates 36 branch locations, as well as loan production offices. Western Alliance Bancorporation was founded in 1994 and is headquartered in Phoenix, Arizona.

Orrstown Financial Services Company Profile (Get Rating)

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, construction, working capital, and other commercial purpose loans, as well as industrial loans; consumer loans comprising 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, 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, insurance, and brokerage services. The company operates through offices in Berks, Cumberland, Dauphin, Franklin, Lancaster, Perry, and York counties, Pennsylvania; and Anne Arundel, Baltimore, Howard, and Washington counties, Maryland, as well as Baltimore City, Maryland. Orrstown Financial Services, Inc. was founded in 1919 and is based in Shippensburg, Pennsylvania.

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