C&F Financial (NASDAQ:CFFI – Get Free Report) and Heritage Commerce (NASDAQ:HTBK – Get Free Report) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, dividends, risk, institutional ownership, valuation, analyst recommendations and earnings.
Analyst Ratings
This is a breakdown of recent recommendations and price targets for C&F Financial and Heritage Commerce, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| C&F Financial | 0 | 0 | 1 | 0 | 3.00 |
| Heritage Commerce | 0 | 5 | 2 | 0 | 2.29 |
Heritage Commerce has a consensus target price of $13.12, indicating a potential downside of 2.42%. Given Heritage Commerce’s higher probable upside, analysts clearly believe Heritage Commerce is more favorable than C&F Financial.
Institutional & Insider Ownership
Profitability
This table compares C&F Financial and Heritage Commerce’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| C&F Financial | 14.91% | 10.72% | 1.02% |
| Heritage Commerce | 17.77% | 8.07% | 1.01% |
Volatility and Risk
C&F Financial has a beta of 0.33, suggesting that its stock price is 67% less volatile than the S&P 500. Comparatively, Heritage Commerce has a beta of 0.69, suggesting that its stock price is 31% less volatile than the S&P 500.
Dividends
C&F Financial pays an annual dividend of $1.92 per share and has a dividend yield of 2.0%. Heritage Commerce pays an annual dividend of $0.52 per share and has a dividend yield of 3.9%. C&F Financial pays out 21.4% of its earnings in the form of a dividend. Heritage Commerce pays out 66.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. C&F Financial has raised its dividend for 1 consecutive years.
Valuation and Earnings
This table compares C&F Financial and Heritage Commerce”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| C&F Financial | $186.13 million | 1.66 | $26.83 million | $8.96 | 10.60 |
| Heritage Commerce | $197.46 million | 4.20 | $47.83 million | $0.78 | 17.24 |
Heritage Commerce has higher revenue and earnings than C&F Financial. C&F Financial is trading at a lower price-to-earnings ratio than Heritage Commerce, indicating that it is currently the more affordable of the two stocks.
Summary
Heritage Commerce beats C&F Financial on 10 of the 17 factors compared between the two stocks.
About C&F Financial
C&F Financial Corp. is a bank holding company, which engages in the provision of banking services to individuals and businesses. It operates through the following segments: Community Banking, Mortgage Banking and Consumer Finance. The Community Banking segment provides checking and savings deposit accounts, business, real estate, development, mortgage, home equity, and installment loans. The Mortgage Banking segment offers ancillary mortgage loan origination services for loan settlement and residential appraisals. The Consumer Finance segment consists of automobile financing through lending programs that are designed to serve customers in the non-prime market who have limited access to traditional automobile financing. The company was founded on March 8, 1994 and is headquartered in Toano, VA.
About Heritage Commerce
Heritage Commerce Corp operates as the bank holding company for Heritage Bank of Commerce that provides various commercial and personal banking services to residents and the business/professional community in California. Its deposit products for business banking and retail markets include interest and non-interest-bearing demand, savings, and money market accounts, as well as certificates of deposit and time deposits. The company’s loan portfolio comprises commercial loans, such as operating secured and unsecured loans advanced for working capital, equipment purchases, and other business purposes; commercial real estate loans; commercial construction loans for rental properties, commercial buildings, and homes; small business administration loans; home equity lines of credit; multifamily loans on residential properties; residential mortgage loans; and consumer loans consisting of loans for financing automobiles, various consumer goods, and other personal purposes. In addition, it offers other banking services, including cashier’s checks, bank by mail, night depositories, safe deposit boxes, direct deposit, automated payroll, electronic funds transfer, online bill pay, homeowner association, remote deposit capture, automated clearing house origination, electronic data interchange, and check imaging services, as well as other customary banking, factoring financing, and electronic banking services. Heritage Commerce Corp was founded in 1994 and is headquartered in San Jose, California.
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