Orrstown Financial Services (NASDAQ:ORRF) vs. Heartland Financial USA (NASDAQ:HTLF) Financial Analysis

Orrstown Financial Services (NASDAQ:ORRF) and Heartland Financial USA (NASDAQ:HTLF) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitability, institutional ownership, valuation, earnings, dividends, risk and analyst recommendations.

Risk and Volatility

Orrstown Financial Services has a beta of 0.9, meaning that its share price is 10% less volatile than the S&P 500. Comparatively, Heartland Financial USA has a beta of 0.97, meaning that its share price is 3% less volatile than the S&P 500.

Institutional and Insider Ownership

44.3% of Orrstown Financial Services shares are held by institutional investors. Comparatively, 71.6% of Heartland Financial USA shares are held by institutional investors. 6.2% of Orrstown Financial Services shares are held by insiders. Comparatively, 1.8% of Heartland Financial USA shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Dividends

Orrstown Financial Services pays an annual dividend of $0.92 per share and has a dividend yield of 2.3%. Heartland Financial USA pays an annual dividend of $1.20 per share and has a dividend yield of 1.8%. Orrstown Financial Services pays out 49.5% of its earnings in the form of a dividend. Heartland Financial USA pays out 67.0% 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 is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Orrstown Financial Services	6.63%	14.41%	1.29%
Heartland Financial USA	8.79%	10.81%	1.09%

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Orrstown Financial Services and Heartland Financial USA, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Orrstown Financial Services	0	1	2	0	2.67
Heartland Financial USA	0	1	3	1	3.00

Orrstown Financial Services currently has a consensus price target of $35.33, suggesting a potential downside of 10.16%. Heartland Financial USA has a consensus price target of $45.60, suggesting a potential downside of 33.03%. Given Orrstown Financial Services’ higher possible upside, research analysts plainly believe Orrstown Financial Services is more favorable than Heartland Financial USA.

Earnings & Valuation

This table compares Orrstown Financial Services and Heartland Financial USA”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Orrstown Financial Services	$161.57 million	4.72	$35.66 million	$1.86	21.15
Heartland Financial USA	$932.87 million	3.13	$79.92 million	$1.79	38.04

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

Summary

Heartland Financial USA beats Orrstown Financial Services 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 Heartland Financial USA

Heartland Financial USA, Inc., a bank holding company, provides commercial, small business, and consumer banking services to individuals and businesses in the United States. The company accepts various deposit products, including checking, demand deposit accounts, NOW accounts, savings, money market, and individual retirement; certificates of deposit; and other time deposits. It offers loans, including commercial and industrial, commercial real estate, agricultural, small business, and real estate mortgage loans; consumer loans comprising motor vehicle, home improvement, home equity line of credit, and fixed rate home equity and personal lines of credit; and credit cards for commercial, business, and personal use. In addition, the company provides business and personal online banking, and mobile banking; bill payment, remote deposit capture, and treasury management services; debit cards; automated teller machines; and automated clearing house services, wire transfers, insured cash sweeps, zero balance accounts, lockbox, image cash letter, remote deposit capture, commercial cards for travel and entertainment purchasing, merchant services to receive credit card payments, investment sweep accounts, reconciliation services, online invoice processing, foreign exchange and positive pay fraud prevention services for checks and automated clearing house services payments. Further, it offers wealth management, trust services, brokerage services, and fixed rate annuity products; and investment services, including mutual funds, individual retirement products, and education savings products. Heartland Financial USA, Inc. was founded in 1981 and is headquartered in Denver, Colorado.