Heritage Commerce (NASDAQ:HTBK – Get Free Report) and Banc of California (NYSE:BANC – Get Free Report) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, institutional ownership, risk, earnings, dividends and valuation.
Analyst Ratings
This is a breakdown of recent ratings and recommmendations for Heritage Commerce and Banc of California, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Heritage Commerce | 0 | 5 | 1 | 0 | 2.17 |
| Banc of California | 0 | 3 | 7 | 0 | 2.70 |
Heritage Commerce currently has a consensus price target of $14.25, suggesting a potential upside of 5.95%. Banc of California has a consensus price target of $22.38, suggesting a potential upside of 24.48%. Given Banc of California’s stronger consensus rating and higher possible upside, analysts plainly believe Banc of California is more favorable than Heritage Commerce.
Dividends
Heritage Commerce pays an annual dividend of $0.52 per share and has a dividend yield of 3.9%. Banc of California pays an annual dividend of $0.48 per share and has a dividend yield of 2.7%. Heritage Commerce pays out 66.7% of its earnings in the form of a dividend. Banc of California pays out -141.2% 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.
Institutional and Insider Ownership
75.6% of Heritage Commerce shares are held by institutional investors. Comparatively, 86.9% of Banc of California shares are held by institutional investors. 2.7% of Heritage Commerce shares are held by insiders. Comparatively, 2.8% of Banc of California shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Profitability
This table compares Heritage Commerce and Banc of California’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Heritage Commerce | 17.77% | 8.07% | 1.01% |
| Banc of California | -0.58% | 8.51% | 0.72% |
Valuation & Earnings
This table compares Heritage Commerce and Banc of California”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Heritage Commerce | $197.46 million | 4.20 | $47.83 million | $0.78 | 17.24 |
| Banc of California | $1.82 billion | 1.57 | $228.97 million | ($0.34) | -52.87 |
Banc of California has higher revenue and earnings than Heritage Commerce. Banc of California is trading at a lower price-to-earnings ratio than Heritage Commerce, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Heritage Commerce has a beta of 0.69, indicating that its share price is 31% less volatile than the S&P 500. Comparatively, Banc of California has a beta of 0.74, indicating that its share price is 26% less volatile than the S&P 500.
Summary
Banc of California beats Heritage Commerce on 10 of the 16 factors compared between the two stocks.
About Heritage Commerce
Heritage Commerce Corp. is a bank holding company that provides commercial banking services through its subsidiary, Heritage Bank of Commerce. The bank serves businesses, professionals, nonprofit organizations and individuals, with a focus on businesses in the San Francisco Bay Area and Silicon Valley. Its offerings include business checking and savings accounts, commercial real estate and business loans, lines of credit, and treasury management and cash-management services. The bank also provides consumer deposit accounts and other traditional banking services.
About Banc of California
Banc of California, Inc. is a bank holding company headquartered in Los Angeles. Through its banking subsidiary, Banc of California, N.A., it provides commercial banking services to businesses, professionals and individuals, with a focus on customers in California. The company offers business and consumer deposit accounts, commercial and real estate lending, and treasury management services. Its lending activities include financing for commercial real estate and businesses, along with specialized financing solutions.
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