Head to Head Survey: Home Bancorp (NASDAQ:HBCP) & Heritage Commerce (NASDAQ:HTBK)

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

Risk & Volatility

Heritage Commerce has a beta of 0.69, suggesting that its share price is 31% less volatile than the S&P 500. Comparatively, Home Bancorp has a beta of 0.51, suggesting that its share price is 49% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Heritage Commerce and Home Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Heritage Commerce	0	5	1	0	2.17
Home Bancorp	0	3	2	0	2.40

Heritage Commerce presently has a consensus target price of $14.25, indicating a potential upside of 5.95%. Home Bancorp has a consensus target price of $65.17, indicating a potential upside of 5.92%. Given Heritage Commerce’s higher probable upside, equities research analysts plainly believe Heritage Commerce is more favorable than Home Bancorp.

Earnings and Valuation

This table compares Heritage Commerce and Home Bancorp”s revenue, earnings per share 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
Home Bancorp	$209.23 million	2.31	$46.06 million	$5.67	10.85

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

Insider and Institutional Ownership

75.6% of Heritage Commerce shares are held by institutional investors. Comparatively, 49.4% of Home Bancorp shares are held by institutional investors. 2.7% of Heritage Commerce shares are held by company insiders. Comparatively, 6.2% of Home Bancorp shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Heritage Commerce and Home Bancorp’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%
Home Bancorp	21.05%	10.01%	1.25%

Dividends

Heritage Commerce pays an annual dividend of $0.52 per share and has a dividend yield of 3.9%. Home Bancorp pays an annual dividend of $1.28 per share and has a dividend yield of 2.1%. Heritage Commerce pays out 66.7% of its earnings in the form of a dividend. Home Bancorp pays out 22.6% 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. Home Bancorp has raised its dividend for 10 consecutive years.

Summary

Home Bancorp beats Heritage Commerce 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 Home Bancorp

Home Bancorp, Inc. operates as the bank holding company for Home Bank, National Association that provides various banking products and services in Louisiana, Mississippi, and Texas. It offers deposit products, including interest-bearing and noninterest-bearing checking, money market, savings, NOW, and certificates of deposit accounts. The company also provides various loan products comprising one-to four-family first mortgage loans, home equity loans and lines, commercial real estate loans, construction and land loans, multi-family residential loans, commercial and industrial loans, and consumer loans. In addition, it invests in securities; and offers credit cards and online banking services. Home Bancorp, Inc. was founded in 1908 and is headquartered in Lafayette, Louisiana.