Head to Head Comparison: CPB (NYSE:CPF) & Heritage Commerce (NASDAQ:HTBK)

Heritage Commerce (NASDAQ:HTBK) and CPB (NYSE:CPF) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, earnings, institutional ownership, dividends, valuation and risk.

Earnings and Valuation

This table compares Heritage Commerce and CPB”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Heritage Commerce	$182.21 million	3.36	$40.53 million	$0.63	15.81
CPB	$344.82 million	2.37	$53.41 million	$2.23	13.59

CPB has higher revenue and earnings than Heritage Commerce. CPB is trading at a lower price-to-earnings ratio than Heritage Commerce, indicating that it is currently the more affordable of the two stocks.

Dividends

Heritage Commerce pays an annual dividend of $0.52 per share and has a dividend yield of 5.2%. CPB pays an annual dividend of $1.08 per share and has a dividend yield of 3.6%. Heritage Commerce pays out 82.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CPB pays out 48.4% of its earnings in the form of a dividend. CPB has increased its dividend for 1 consecutive years.

Profitability

This table compares Heritage Commerce and CPB’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Heritage Commerce	15.00%	6.61%	0.82%
CPB	17.31%	12.80%	0.95%

Insider & Institutional Ownership

75.6% of Heritage Commerce shares are owned by institutional investors. Comparatively, 88.4% of CPB shares are owned by institutional investors. 2.7% of Heritage Commerce shares are owned by company insiders. Comparatively, 2.4% of CPB shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of recent recommendations for Heritage Commerce and CPB, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Heritage Commerce	0	0	2	0	3.00
CPB	0	0	1	0	3.00

Heritage Commerce currently has a consensus target price of $10.67, suggesting a potential upside of 7.10%. CPB has a consensus target price of $35.00, suggesting a potential upside of 15.46%. Given CPB’s higher probable upside, analysts clearly believe CPB is more favorable than Heritage Commerce.

Risk & Volatility

Heritage Commerce has a beta of 0.87, suggesting that its share price is 13% less volatile than the S&P 500. Comparatively, CPB has a beta of 1.11, suggesting that its share price is 11% more volatile than the S&P 500.

Summary

CPB beats Heritage Commerce on 11 of the 16 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 CPB

Central Pacific Financial Corp. operates as the bank holding company for Central Pacific Bank that provides a range of commercial banking products and services to businesses, professionals, and individuals in the United States. It offers various deposit products and services, including checking, savings and time deposits, cash management and digital banking, trust, and retail brokerage services, as well as money market accounts and certificates of deposit. The company also provides various lending activities, such as commercial, commercial and residential mortgage, home equity, and consumer loans; and other products and services comprising debit cards, internet and mobile banking, cash management services, full-service ATMs, safe deposit boxes, international banking services, night depository facilities, foreign exchange, and wire transfers. In addition, it offers wealth management products and services that include non-deposit investment products, annuities, insurance, investment management, asset custody and general consultation, and planning services. The company was founded in 1954 and is headquartered in Honolulu, Hawaii.