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Strength Seen in Orrstown (ORRF): Can Its 5.7% Jump Turn into More Strength?

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Orrstown Financial Services (ORRF - Free Report) shares soared 5.7% in the last trading session to close at $19.45. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 13.3% gain over the past four weeks.

Following the after effects of the banking sector turmoil in the first quarter of this year, investors seem to have been regaining confidence in the sector. Orrstown Financial has witnessed a rise in share price for the second consecutive day. Investors seem to have been turning optimistic after the passing of the bill to raise the debt ceiling. Moreover, while consumer spending has been slowing, it is still stronger than what was expected if we headed straight into recession. These developments probably drove the ORRF stock higher in last day’s trading session.

This holding company for Orrstown Bank is expected to post quarterly earnings of $0.73 per share in its upcoming report, which represents a year-over-year change of -12.1%. Revenues are expected to be $31.75 million, up 1.4% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Orrstown, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on ORRF going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Orrstown is a member of the Zacks Banks - Northeast industry. One other stock in the same industry, Arrow Financial (AROW - Free Report) , finished the last trading session 10% higher at $20.02. AROW has returned -8.6% over the past month.

For Arrow Financial, the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.66. This represents a change of -13.2% from what the company reported a year ago. Arrow Financial currently has a Zacks Rank of #3 (Hold).


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