Analyzing Community West Bancshares (NASDAQ:CWBC) & Orrstown Financial Services (NASDAQ:ORRF)

Orrstown Financial Services (NASDAQ:ORRF) and Community West Bancshares (NASDAQ:CWBC) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their analyst recommendations, profitability, institutional ownership, risk, valuation, earnings and dividends.

Dividends

Orrstown Financial Services pays an annual dividend of $1.04 per share and has a dividend yield of 3.5%. Community West Bancshares pays an annual dividend of $0.48 per share and has a dividend yield of 2.6%. Orrstown Financial Services pays out 56.5% of its earnings in the form of a dividend. Community West Bancshares pays out 92.3% 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 is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

44.3% of Orrstown Financial Services shares are held by institutional investors. Comparatively, 33.8% of Community West Bancshares shares are held by institutional investors. 5.3% of Orrstown Financial Services shares are held by company insiders. Comparatively, 11.2% of Community West Bancshares shares are held by company 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.

Earnings & Valuation

This table compares Orrstown Financial Services and Community West Bancshares”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	$192.69 million	3.01	$22.05 million	$1.84	16.27
Community West Bancshares	$46.27 million	7.62	$7.67 million	$0.52	35.59

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

Analyst Recommendations

This is a summary of current ratings for Orrstown Financial Services and Community West Bancshares, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Orrstown Financial Services	0	1	3	0	2.75
Community West Bancshares	0	1	2	0	2.67

Orrstown Financial Services currently has a consensus target price of $39.75, suggesting a potential upside of 32.79%. Community West Bancshares has a consensus target price of $23.33, suggesting a potential upside of 26.09%. Given Orrstown Financial Services’ stronger consensus rating and higher probable upside, equities analysts plainly believe Orrstown Financial Services is more favorable than Community West Bancshares.

Volatility & Risk

Orrstown Financial Services has a beta of 0.87, indicating that its stock price is 13% less volatile than the S&P 500. Comparatively, Community West Bancshares has a beta of 0.91, indicating that its stock price is 9% less volatile than the S&P 500.

Profitability

This table compares Orrstown Financial Services and Community West Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Orrstown Financial Services	7.70%	15.77%	1.42%
Community West Bancshares	4.59%	7.90%	0.78%

Summary

Orrstown Financial Services beats Community West Bancshares on 12 of the 16 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 Community West Bancshares

Community West Bancshares operates as the bank holding company for Community West Bank, N.A. that provides various financial products and services in California. The company offers deposit products, such as checking accounts, savings accounts, money market accounts, and fixed rate and fixed maturity certificates of deposits; and cash management products. It also provides commercial, commercial real estate, consumer, manufactured housing, and small business administration loans, as well as agricultural loans for real estate and operating lines; home equity lines of credit collateralized by residential real estate; single family real estate loans; and installment loans consisting of automobile and general-purpose loans. The company serves small to medium-sized businesses and their owners, professionals, high-net worth individuals, and non-profit organizations. Community West Bancshares was founded in 1989 and is headquartered in Goleta, California.