Heritage Financial (HFWA) AI Stock Analysis

• Market Cap: $842.04M
• Dividend Yield: 3.83%
• Average Volume (3M): 162.78K
• Price to Earnings (P/E): 17.3
• Beta (1Y): 0.77
• Revenue Growth: 6.92%
• EPS Growth: 13.94%
• Country: US
• Employees: 757
• Sector: Financial
• Sector Strength: 70
• Industry: Banks - Regional
• EPS (TTM): 0.36
• Shares Outstanding: 33,953,194
• 10 Day Avg. Volume: 171,004
• 30 Day Avg. Volume: 162,782
• PEG Ratio: -0.69
• Price to Book (P/B): 0.98
• Price to Sales (P/S): 2.66
• P/FCF Ratio: 13.84
• Enterprise Value/Market Cap: 1.21
• Enterprise Value/Revenue: 3.12
• Enterprise Value/Gross Profit: 4.59
• Enterprise Value/Ebitda: 16.23
• 1Y Price Target: $27.00
• Price Target Upside: 7.87% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 4

• Rating: 70 Outperform
• Price Target: $28.00 ▲(11.87% Upside)

Heritage Financial's overall stock score reflects a solid financial performance with strong profitability and cash flow management. Technical indicators support a bullish trend, although caution is advised due to potential overbought conditions. The valuation is reasonable but not significantly undervalued, suggesting moderate growth potential. The earnings call provided a positive outlook, but concerns about deposit declines and credit quality warrant attention.

Heritage Financial Business Overview & Revenue Model

Company Description

Heritage Financial Corporation operates as the bank holding company for Heritage Bank that provides various financial services to small and medium sized businesses and individuals in the United States. The company accepts various deposit products, such as noninterest demand deposits, interest bearing demand deposits, money market accounts, savings accounts, personal checking accounts, and certificates of deposit. Its loan portfolio includes commercial and industrial loans, owner-occupied and non-owner occupied commercial real estate loans, one-to-four family residential loans, real estate construction and land development loans, consumer loans, commercial business loans, lines of credit, term equipment financing, and term real estate loans, as well as commercial business loans to a range of businesses in industries that include real estate and rental and leasing, healthcare, accommodation and food services, retail trade, and construction. The company also originates loans that are guaranteed by the U.S. Small Business Administration; and offers trust services, as well as objective advice. As of January 27, 2022, it had a network of 49 banking offices located in Washington and Oregon. The company was formerly known as Heritage Financial Corporation, M.H.C. and changed its name to Heritage Financial Corporation in 1998. Heritage Financial Corporation was founded in 1927 and is headquartered in Olympia, Washington.

How the Company Makes Money

Heritage Financial generates revenue through multiple key streams. Primarily, the company earns interest income from loans issued to consumers and businesses, including mortgages, personal loans, and commercial lending. Additionally, HFWA collects fees from various banking services, such as account maintenance, transaction fees, and ATM usage. The wealth management sector contributes to revenue through advisory fees and commissions on investment products. Significant partnerships with local businesses and real estate developers enhance their lending portfolio, while their commitment to community banking fosters customer loyalty, driving deposits that are crucial for funding loan operations.

Heritage Financial Financial Statement Overview

Summary

Heritage Financial demonstrates steady growth and financial stability. The income statement reflects consistent revenue growth and profitability, albeit with slight margin compression. The balance sheet shows improved leverage metrics, enhancing financial stability. Strong cash flow generation underscores the company's ability to support operations and strategic initiatives. While profitability indicators have slightly declined, the overall financial health remains solid.

Income Statement

Heritage Financial's income statement shows a steady increase in total revenue over the analyzed periods, with a notable revenue growth rate of approximately 9% from 2023 to 2024 and 3% from 2024 to TTM. The gross profit margin remains strong, though it has slightly decreased from previous years. The net profit margin is stable at around 15.7% for TTM, reflecting consistent profitability. However, EBIT and EBITDA margins have decreased compared to historical levels, indicating potential cost pressures.

Balance Sheet

The balance sheet reveals a strong equity position, as evidenced by a solid equity ratio of 12.4% in TTM. The debt-to-equity ratio has improved, decreasing from 0.47 in 2024 to 0.32 in TTM, indicating reduced leverage and potential risk mitigation. Return on Equity (ROE) remains healthy at 5.83%, but has declined from previous years, suggesting moderate profitability. The overall financial stability is supported by the company's reduced debt levels.

Cash Flow

Cash flow analysis shows robust free cash flow generation, with a positive free cash flow growth rate of 9.96% in TTM. The operating cash flow to net income ratio is strong at 1.38, indicating efficient cash conversion. The free cash flow to net income ratio of 1.31 further supports the company's ability to generate cash above net earnings. Overall, cash flows are strong, providing a buffer for future investments or debt repayments.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	325.19M	317.19M	303.13M	257.05M	247.45M	251.55M
Gross Profit	221.31M	210.56M	239.54M	250.40M	269.78M	202.12M
EBITDA	62.59M	55.49M	78.52M	102.53M	101.88M	53.09M
Net Income	49.48M	43.26M	61.76M	81.88M	98.03M	46.57M
Balance Sheet
Total Assets	7.07B	7.11B	7.17B	6.98B	7.43B	6.62B
Cash, Cash Equivalents and Short-Term Investments	747.21M	881.49M	1.36B	1.44B	2.62B	1.55B
Total Debt	285.40M	405.06M	521.76M	68.07M	72.02M	56.57M
Total Liabilities	6.18B	6.24B	6.32B	6.18B	6.58B	5.79B
Stockholders Equity	888.21M	863.53M	853.26M	797.89M	854.43M	820.44M
Cash Flow
Free Cash Flow	82.05M	61.02M	99.15M	90.44M	66.51M	63.33M
Operating Cash Flow	86.56M	64.48M	109.52M	94.46M	69.53M	70.33M
Investing Cash Flow	71.28M	-85.90M	-93.45M	-1.21B	163.76M	-538.55M
Financing Cash Flow	-17.50M	-86.45M	105.31M	-506.38M	746.68M	982.97M

Heritage Financial Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 25.03
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HFWA, the sentiment is Positive. The current price of 25.03 is above the 20-day moving average (MA) of 24.01, above the 50-day MA of 23.96, and above the 200-day MA of 23.65, indicating a bullish trend. The MACD of 0.38 indicates Negative momentum. The RSI at 62.56 is Neutral, neither overbought nor oversold. The STOCH value of 79.98 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HFWA.

Heritage Financial Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BHRB	77 Outperform	$944.91M	9.13	14.19%	3.50%	113.60%	1224.38%
FMBH	76 Outperform	$962.77M	11.40	9.87%	2.42%	5.18%	13.05%
UVSP	74 Outperform	$898.15M	11.40	9.02%	2.76%	5.94%	12.97%
HFWA	70 Outperform	$842.04M	17.31	5.69%	3.83%	6.92%	13.94%
Sector *	68 Neutral	$17.80B	11.94	9.89%	3.74%	9.69%	1.17%
CFFN	67 Neutral	$861.88M	13.79	5.92%	5.24%	6.49%	―
AMTB	64 Neutral	$888.43M	―	0.44%	1.69%	-6.88%	-131.00%

Heritage Financial Corporate Events

Heritage Financial Reports Q2 2025 Earnings and Dividend

On July 24, 2025, Heritage Financial Corporation announced its second quarter results, reporting a net income of $12.2 million, a decrease from the previous quarter’s $13.9 million. The company declared a regular quarterly cash dividend of $0.24 per share, to be paid on August 20, 2025. The quarter included a pre-tax loss of $6.9 million from the sale of investment securities as part of a strategic balance sheet repositioning, impacting earnings per share by $0.15. Despite these losses, Heritage Financial saw growth in core earnings, attributed to increased yields on loans and investment securities, and a $100 million increase in total deposits since the end of 2024. The company remains optimistic about future profitability and sustainable long-term returns for shareholders.