Head-To-Head Survey: Heritage Commerce (NASDAQ:HTBK) & C&F Financial (NASDAQ:CFFI)

Heritage Commerce (NASDAQ:HTBK) and C&F Financial (NASDAQ:CFFI) are both small-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, risk, profitability, institutional ownership, earnings, analyst recommendations and valuation.

Institutional & Insider Ownership

75.6% of Heritage Commerce shares are owned by institutional investors. Comparatively, 37.2% of C&F Financial shares are owned by institutional investors. 2.7% of Heritage Commerce shares are owned by insiders. Comparatively, 6.4% of C&F Financial shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Heritage Commerce pays an annual dividend of $0.52 per share and has a dividend yield of 3.9%. C&F Financial pays an annual dividend of $1.92 per share and has a dividend yield of 2.0%. Heritage Commerce pays out 66.7% of its earnings in the form of a dividend. C&F Financial pays out 21.4% 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 increased its dividend for 1 consecutive years.

Earnings & Valuation

This table compares Heritage Commerce and C&F Financial”s 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
C&F Financial	$186.13 million	1.66	$26.83 million	$8.96	10.59

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.

Risk and Volatility

Heritage Commerce has a beta of 0.69, suggesting that its stock price is 31% less volatile than the S&P 500. Comparatively, C&F Financial has a beta of 0.33, suggesting that its stock price is 67% less volatile than the S&P 500.

Profitability

This table compares Heritage Commerce and C&F Financial’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%
C&F Financial	14.91%	10.72%	1.02%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Heritage Commerce and C&F Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Heritage Commerce	0	5	2	0	2.29
C&F Financial	0	0	1	0	3.00

Heritage Commerce presently has a consensus price target of $13.12, suggesting a potential downside of 2.42%. Given Heritage Commerce’s higher possible upside, analysts clearly believe Heritage Commerce is more favorable than C&F Financial.

Summary

Heritage Commerce beats C&F Financial on 10 of the 17 factors compared between the two stocks.

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.

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.