Comparing Heritage Commerce (NASDAQ:HTBK) & Columbia Financial (NASDAQ:CLBK)

Columbia Financial (NASDAQ:CLBK) and Heritage Commerce (NASDAQ:HTBK) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, earnings, profitability, analyst recommendations, risk, institutional ownership and dividends.

Insider & Institutional Ownership

12.7% of Columbia Financial shares are owned by institutional investors. Comparatively, 75.6% of Heritage Commerce shares are owned by institutional investors. 3.5% of Columbia Financial shares are owned by company insiders. Comparatively, 2.7% of Heritage Commerce shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Columbia Financial	11.19%	5.29%	0.56%
Heritage Commerce	17.77%	8.07%	1.01%

Dividends

Columbia Financial pays an annual dividend of $0.20 per share and has a dividend yield of 1.7%. Heritage Commerce pays an annual dividend of $0.52 per share and has a dividend yield of 3.9%. Columbia Financial pays out 58.8% 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.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Columbia Financial	$508.02 million	6.13	$51.77 million	$0.34	33.97
Heritage Commerce	$197.46 million	4.20	$47.83 million	$0.78	17.24

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

Volatility & Risk

Columbia Financial has a beta of 0.24, meaning that its stock price is 76% less volatile than the S&P 500. Comparatively, Heritage Commerce has a beta of 0.69, meaning that its stock price is 31% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings for Columbia Financial and Heritage Commerce, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Columbia Financial	0	1	3	0	2.75
Heritage Commerce	0	5	2	0	2.29

Columbia Financial currently has a consensus price target of $15.10, suggesting a potential upside of 30.74%. Heritage Commerce has a consensus price target of $13.12, suggesting a potential downside of 2.42%. Given Columbia Financial’s stronger consensus rating and higher probable upside, equities analysts plainly believe Columbia Financial is more favorable than Heritage Commerce.

Summary

Columbia Financial beats Heritage Commerce on 9 of the 16 factors compared between the two stocks.

About Columbia Financial

Columbia Financial, Inc., a bank holding company, provides various financial services to businesses and consumers in the United States. Its deposit products include checking, interest-earning checking products and municipal, savings and club deposits, and money market accounts, as well as certificates of deposit. The company also provides various loans, including multifamily and commercial real estate loans, commercial business loans, one-to-four family residential loans, construction loans, home equity loans and advances, and other consumer loans, such as automobiles and personal loans, as well as unsecured and overdraft lines of credit. In addition, it offers title insurance products; wealth management services; and cash management services comprising remote deposit, lockbox service, sweep accounts, and escrow services. The company operates full-service banking offices in New Jersey; and branch offices in Freehold, New Jersey. Columbia Financial, Inc. was founded in 1926 and is based in Fair Lawn, New Jersey. Columbia Financial, Inc. is a subsidiary of Columbia Bank MHC.

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.