Head to Head Review: Home Bancorp (HBCP) vs. Heritage Financial (HFWA)

Home Bancorp (NASDAQ: HBCP) and Heritage Financial (NASDAQ:HFWA) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, analyst recommendations, valuation, profitability, dividends, risk and institutional ownership.

Analyst Ratings

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This is a breakdown of recent recommendations for Home Bancorp and Heritage Financial, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Home Bancorp 0 2 0 0 2.00
Heritage Financial 0 1 4 0 2.80

Home Bancorp presently has a consensus target price of $46.00, indicating a potential upside of 6.11%. Heritage Financial has a consensus target price of $34.50, indicating a potential upside of 14.16%. Given Heritage Financial’s stronger consensus rating and higher possible upside, analysts clearly believe Heritage Financial is more favorable than Home Bancorp.

Volatility & Risk

Home Bancorp has a beta of 0.1, suggesting that its stock price is 90% less volatile than the S&P 500. Comparatively, Heritage Financial has a beta of 0.49, suggesting that its stock price is 51% less volatile than the S&P 500.

Dividends

Home Bancorp pays an annual dividend of $0.60 per share and has a dividend yield of 1.4%. Heritage Financial pays an annual dividend of $0.60 per share and has a dividend yield of 2.0%. Home Bancorp pays out 21.7% of its earnings in the form of a dividend. Heritage Financial pays out 40.5% 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.

Profitability

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

Net Margins Return on Equity Return on Assets
Home Bancorp 21.08% 9.68% 1.17%
Heritage Financial 21.16% 8.86% 1.11%

Insider and Institutional Ownership

34.9% of Home Bancorp shares are held by institutional investors. Comparatively, 70.9% of Heritage Financial shares are held by institutional investors. 13.2% of Home Bancorp shares are held by insiders. Comparatively, 1.8% of Heritage Financial shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Home Bancorp and Heritage Financial’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Home Bancorp $84.36 million 4.83 $16.82 million $2.77 15.65
Heritage Financial $183.29 million 5.61 $41.79 million $1.48 20.42

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

Summary

Heritage Financial beats Home Bancorp on 11 of the 16 factors compared between the two stocks.

Home Bancorp Company Profile

Home Bancorp, Inc. operates as the holding company for Home Bank, National Association that provides various banking products and services in Louisiana. It offers deposits products, including interest-bearing and noninterest-bearing checking, money market, savings, and certificates of deposit accounts. The company also provides various loan products, such as 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 online banking services. As of December 31, 2017, the company operated a network of 40 banking offices in Greater Lafayette, Southwest Louisiana, Baton Rouge, Greater New Orleans and Northshore regions of south Louisiana, and the Natchez and Vicksburg regions of west Mississippi. Home Bancorp, Inc. was founded in 1908 and is headquartered in Lafayette, Louisiana.

Heritage Financial Company Profile

Heritage Financial Corporation operates as the bank holding company for Heritage Bank that provides various financial services to businesses and individuals in the United States. The company accepts various deposit products, such as noninterest demand accounts, interest bearing demand deposits, money market accounts, savings accounts, personal checking accounts, and certificates of deposit. Its loan portfolio includes commercial and industrial loans, owner-occupied and non-owner occupied commercial real estate loans, one-to-four family residential loans, real estate construction and land development loans, consumer loans, business lines of credit, term equipment financing, and term real estate loans, as well as commercial loans focuses on real estate related industries and businesses in agricultural, healthcare, legal, and other professions. The company also originates loans that are guaranteed by the U.S. Small Business Administration; and offers trust services through trust powers, as well as objective advice. As of December 31, 2017, the company had a network of 59 branches located in Washington and Oregon. The company was formerly known as Heritage Financial Corporation, M.H.C. and changed its name to Heritage Financial Corporation in 1998. Heritage Financial Corporation was founded in 1994 and is headquartered in Olympia, Washington.

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