Heritage Commerce (HTBK) AI Stock Analysis

• Market Cap: $519.19M
• Dividend Yield: 6.2%
• Average Volume (3M): 347.05K
• Price to Earnings (P/E): 12.8
• Beta (1Y): 0.90
• Revenue Growth: 3.35%
• EPS Growth: -37.36%
• Country: US
• Employees: 345
• Sector: Financial
• Sector Strength: 79
• Industry: Banks - Regional
• EPS (TTM): 0.66
• Shares Outstanding: 61,442,932
• 10 Day Avg. Volume: 297,304
• 30 Day Avg. Volume: 347,046
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 3.44
• Price to Cash Flow (P/CF): 9.30
• P/FCF Ratio: 4.80
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $11.83
• Price Target Upside: 41.00% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4

Heritage Commerce's strong gross profit margin and debt-free balance sheet are significant strengths, indicating solid financial stability. However, the company faces challenges with declining revenue, net income, and cash flow, which are potential risks. The technical analysis shows a bearish trend, but the stock is not overvalued, with a reasonable P/E ratio and attractive dividend yield. Investors should monitor revenue trends and cash flow closely.

Heritage Commerce Business Overview & Revenue Model

Company Description

Heritage Commerce Corp (HTBK) is a bank holding company headquartered in San Jose, California. It operates through its wholly-owned subsidiary, Heritage Bank of Commerce, providing a comprehensive range of commercial and retail banking services. The company primarily focuses on serving small to medium-sized businesses, as well as offering personal banking services. Its core products and services include commercial loans, real estate loans, personal loans, deposit services, and cash management services.

How the Company Makes Money

Heritage Commerce Corp generates revenue primarily through interest income from its loan portfolio and investment securities. The company earns money by charging interest on loans provided to businesses and individuals, which include commercial loans, real estate loans, and consumer loans. Additionally, it earns fee income from various banking services such as cash management, deposit services, and other financial products. Heritage Commerce also benefits from strategic partnerships and a strong client base in its operational regions, which contribute to its earnings through increased deposits and lending opportunities.

Heritage Commerce Financial Statement Overview

Summary

Heritage Commerce exhibits strong gross profit margins and a solid balance sheet with zero debt, bolstering financial stability. However, the decline in revenue, net income, and cash flow generation are areas of concern, indicating potential challenges ahead in maintaining profitability and cash reserves. The company should focus on reversing the revenue decline and enhancing cash flow efficiency.

Income Statement

The TTM (Trailing-Twelve-Months) gross profit margin stands at 100%, reflecting a strong capacity to manage direct costs. However, the TTM revenue of $170.26M shows a decline from $191.47M in the previous year, indicating a negative revenue growth trend, which is a concern. Net profit margin for TTM is 23.8%, down from 33.7% in 2023, suggesting reduced profitability. EBIT margin remains relatively stable at 53.2% for TTM, but the absence of EBITDA in TTM raises concerns about operational efficiency.

Balance Sheet

The company demonstrates financial stability with a debt-free TTM balance sheet, enhancing its risk profile. The equity ratio is 12.2%, indicating moderate leverage. ROE for TTM is 5.9%, down from 9.6%, reflecting a decreased return on equity, though still positive. The increase in stockholders' equity to $689.73M suggests strength in capitalization.

Cash Flow

Operating cash flow to net income ratio for TTM is 0.56, showing reasonable cash generation relative to profits. TTM free cash flow is $21.07M, a decline from $71.34M in 2023, indicating potential challenges in cash generation. Free cash flow to net income ratio is 0.52, suggesting adequate but declining cash flow relative to net income.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
170.26M	191.47M	189.99M	155.81M	151.81M
	Gross Profit
170.26M	191.47M	189.99M	155.81M	151.81M
	EBIT
90.66M	90.42M	103.31M	65.87M	49.07M
	EBITDA
0.00	93.94M	98.12M	69.94M	53.77M
	Net Income Common Stockholders
40.53M	64.44M	66.56M	47.70M	35.30M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
29.86M	850.76M	796.20M	1.41B	1.37B
	Total Assets
5.65B	5.19B	5.15B	5.50B	4.63B
	Total Debt
39.65M	39.50M	39.35M	39.92M	39.74M
	Net Debt
9.79M	-368.63M	-267.25M	-1.27B	-1.09B
	Total Liabilities
4.96B	4.52B	4.52B	4.90B	4.06B
	Stockholders Equity
689.73M	672.90M	632.46M	598.03M	577.89M
Cash Flow		Free Cash Flow
37.35M	71.34M	69.07M	56.60M	54.93M
	Operating Cash Flow
38.97M	73.01M	69.85M	56.85M	58.09M
	Investing Cash Flow
110.62M	70.18M	-669.49M	-696.83M	145.59M
	Financing Cash Flow
410.40M	-41.67M	-399.98M	815.13M	470.02M

Heritage Commerce Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 8.39
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HTBK, the sentiment is Negative. The current price of 8.39 is below the 20-day moving average (MA) of 9.34, below the 50-day MA of 9.85, and below the 200-day MA of 9.62, indicating a bearish trend. The MACD of -0.13 indicates Positive momentum. The RSI at 38.05 is Neutral, neither overbought nor oversold. The STOCH value of 28.51 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HTBK.

Heritage Commerce Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FMBL	70 Outperform	$694.70M	15.59	3.30%	2.00%	6.32%	-35.68%
WABC	69 Neutral	$1.24B	8.95	16.67%	3.94%	-5.00%	-14.23%
HTBK	68 Neutral	$519.19M	12.83	5.95%	6.20%	3.35%	-37.36%
BANR	68 Neutral	$2.07B	12.32	9.86%	3.36%	11.04%	-8.38%
BCML	67 Neutral	$269.24M	11.54	7.41%	2.07%	2.89%	-7.12%
Sector *	64 Neutral	$13.44B	9.41	9.19%	4.92%	16.30%	-8.66%
CVBF	61 Neutral	$2.34B	11.63	9.35%	4.78%	2.84%	-9.63%