Contrasting Eastern Bankshares (NASDAQ:EBC) & Orrstown Financial Services (NASDAQ:ORRF)

Orrstown Financial Services (NASDAQ:ORRF) and Eastern Bankshares (NASDAQ:EBC) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, valuation, institutional ownership, risk, dividends, earnings and analyst recommendations.

Analyst Ratings

This is a summary of current ratings and recommmendations for Orrstown Financial Services and Eastern Bankshares, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Orrstown Financial Services	0	2	4	0	2.67
Eastern Bankshares	0	1	3	0	2.75

Orrstown Financial Services presently has a consensus price target of $39.25, indicating a potential upside of 9.77%. Eastern Bankshares has a consensus price target of $21.50, indicating a potential upside of 14.15%. Given Eastern Bankshares’ stronger consensus rating and higher possible upside, analysts clearly believe Eastern Bankshares is more favorable than Orrstown Financial Services.

Dividends

Orrstown Financial Services pays an annual dividend of $1.08 per share and has a dividend yield of 3.0%. Eastern Bankshares pays an annual dividend of $0.52 per share and has a dividend yield of 2.8%. Orrstown Financial Services pays out 28.6% of its earnings in the form of a dividend. Eastern Bankshares pays out 208.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Orrstown Financial Services has raised its dividend for 10 consecutive years and Eastern Bankshares has raised its dividend for 5 consecutive years. Orrstown Financial Services is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

44.3% of Orrstown Financial Services shares are held by institutional investors. Comparatively, 71.7% of Eastern Bankshares shares are held by institutional investors. 4.7% of Orrstown Financial Services shares are held by company insiders. Comparatively, 1.1% of Eastern Bankshares shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Orrstown Financial Services	20.48%	14.39%	1.44%
Eastern Bankshares	4.97%	7.94%	1.15%

Volatility and Risk

Orrstown Financial Services has a beta of 0.87, indicating that its share price is 13% less volatile than the S&P 500. Comparatively, Eastern Bankshares has a beta of 0.95, indicating that its share price is 5% less volatile than the S&P 500.

Earnings & Valuation

This table compares Orrstown Financial Services and Eastern Bankshares”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	$286.37 million	2.43	$22.05 million	$3.78	9.46
Eastern Bankshares	$1.09 billion	3.65	$119.56 million	$0.25	75.34

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

Summary

Orrstown Financial Services beats Eastern Bankshares on 9 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 Eastern Bankshares

Eastern Bankshares, Inc. operates as the bank holding company for Eastern Bank that provides banking products and services primarily to retail, commercial, and small business customers. The company provides deposit accounts, interest checking accounts, money market accounts, savings accounts, and time certificates of deposit accounts. It also offers commercial and industrial, commercial real estate and construction, small business, residential real estate, and home equity loans; lines of credit; and other consumer loans comprising unsecured personal lines of credit, overdraft protection, automobile loans, home improvement loans, airplane loans, and other personal loans. In addition, the company provides trust, financial planning and portfolio management, automated lock box collection, cash management, and account reconciliation services; personal, business, and employee benefits insurance products. Eastern Bankshares, Inc. was founded in 1818 and is headquartered in Boston, Massachusetts.