Heritage Financial (HFWA) AI Stock Analysis

• Market Cap: $873.44M
• Dividend Yield: 3.75%
• Average Volume (3M): 172.63K
• Price to Earnings (P/E): 17.3
• Beta (1Y): 0.78
• Revenue Growth: 9.12%
• EPS Growth: 11.62%
• Country: US
• Employees: 757
• Sector: Financial
• Sector Strength: 82
• Industry: Banks - Regional
• EPS (TTM): 0.40
• Shares Outstanding: 34,105,515
• 10 Day Avg. Volume: 184,021
• 30 Day Avg. Volume: 172,632
• PEG Ratio: 0.70
• Price to Book (P/B): 1.29
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 13.09
• Enterprise Value/Market Cap: 0.95
• Enterprise Value/Revenue: 0.70
• Enterprise Value/Gross Profit: 3.55
• Enterprise Value/Ebitda: 4.25
• 1Y Price Target: $28.00
• Price Target Upside: 9.33% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

• Rating: 66 Neutral
• Price Target: $25.00 ▼(-2.38%Downside)

Heritage Financial's overall stock score reflects steady financial performance, balanced technical indicators, and reasonable valuation. While the earnings call and corporate events highlight positive strategic initiatives, slight margin compression and moderate technical signals suggest a cautious outlook.

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 makes money primarily through interest income generated from its loan portfolio, which includes commercial and consumer loans. The company also earns revenue from non-interest income sources such as service charges on deposit accounts, fees from mortgage banking activities, and income from investment securities. Additionally, Heritage Financial may benefit from partnerships with other financial institutions or service providers, enhancing its product offerings and revenue potential. Overall, the company's earnings are influenced by factors such as interest rate fluctuations, credit quality of its borrowers, and regional economic conditions.

Heritage Financial Financial Statement Overview

Summary

Heritage Financial maintains a stable financial position with a strong balance sheet and efficient operations. However, inconsistent revenue growth and declining profitability margins indicate areas for improvement. The cash flow is stable but shows signs of pressure.

Income Statement

Heritage Financial shows a mixed performance in its income statement. Gross profit margins are stable, indicating good cost management. However, net profit margin has decreased from the previous year, reflecting lower profitability. Revenue growth is inconsistent, with recent declines indicating potential challenges. EBIT margins are strong, suggesting efficient operations, although EBITDA margins are not applicable due to zero EBITDA reported.

Balance Sheet

The balance sheet for Heritage Financial is strong, with a zero total debt indicating no leverage risk. The equity ratio is robust, showcasing financial stability and a strong asset base. Return on equity is positive, albeit lower than previous years, suggesting some efficiency concerns. Overall, the company's balance sheet reflects solid financial health with ample equity support.

Cash Flow

Cash flow analysis reveals a slight decline in operating cash flow, yet free cash flow remains positive, indicating operational efficiency. Free cash flow growth is negative, reflecting challenges in maintaining cash generation levels. The operating cash flow to net income ratio is stable, but the declining free cash flow to net income ratio suggests potential pressure on liquidity.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	317.19M	239.54M	257.05M	247.22M	238.23M
Gross Profit	210.56M	239.54M	248.98M	269.78M	238.23M
EBITDA	55.49M	78.52M	102.53M	101.88M	9.11M
Net Income	43.26M	61.76M	81.88M	98.03M	46.57M
Balance Sheet
Total Assets	7.11B	7.17B	6.98B	7.43B	6.62B
Cash, Cash Equivalents and Short-Term Investments	823.22M	1.19B	1.44B	2.62B	1.55B
Total Debt	405.06M	21.77M	21.47M	21.18M	20.89M
Total Liabilities	6.24B	6.32B	21.47M	21.18M	20.89M
Stockholders Equity	863.53M	853.26M	797.89M	854.43M	820.44M
Cash Flow
Free Cash Flow	61.02M	99.15M	90.44M	66.51M	63.33M
Operating Cash Flow	67.44M	109.52M	94.46M	69.53M	70.33M
Investing Cash Flow	-85.90M	-93.45M	-1.21B	163.76M	-538.55M
Financing Cash Flow	-86.45M	105.31M	-506.38M	746.68M	982.97M

Heritage Financial Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 25.61
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

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 25.61 is above the 20-day moving average (MA) of 23.54, above the 50-day MA of 23.40, and above the 200-day MA of 23.46, indicating a bullish trend. The MACD of 0.45 indicates Negative momentum. The RSI at 71.58 is Negative, neither overbought nor oversold. The STOCH value of 95.85 is Negative, 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
FMBH	75 Outperform	$952.60M	11.80	9.65%	2.42%	10.25%	8.73%
BHRB	75 Outperform	$958.40M	18.20	10.71%	3.44%	181.68%	28.82%
CFFN	73 Outperform	$853.91M	15.92	5.09%	5.29%	6.02%	―
UVSP	69 Neutral	$944.38M	12.27	8.93%	2.69%	7.16%	12.20%
Sector *	67 Neutral	¥722.93B	10.85	7.44%	3.36%	7.82%	15.26%
HFWA	66 Neutral	$873.44M	17.26	5.95%	3.75%	9.12%	11.62%
AMTB	63 Neutral	$821.52M	―	-1.83%	1.83%	-5.43%	-186.90%

Heritage Financial Corporate Events

Heritage Financial Announces New CEO Appointment

On May 6, 2025, Heritage Financial Corporation announced the completion of its CEO succession plan, with Bryan D. McDonald assuming the roles of President and CEO of both the company and Heritage Bank. This transition follows the retirement of Jeffrey J. Deuel, who will continue in an advisory role until 2027. The appointment aims to ensure a seamless leadership transition, enhancing shareholder value and maintaining the company’s focus on quality customer service and community support.

Heritage Financial Reports Strong Q1 2025 Results

On April 24, 2025, Heritage Financial announced its first-quarter results, reporting a net income of $13.9 million, an increase from the previous quarter. The company declared a regular quarterly cash dividend of $0.24 per share, to be paid on May 21, 2025. Despite a pre-tax loss on the sale of securities, Heritage Financial saw improvements in net interest margin and deposit growth, reflecting a strategic repositioning of its balance sheet aimed at enhancing future profitability.