NEW YORK ( TheStreet) -- Heritage Commerce Corporation (Nasdaq: HTBK) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income and good cash flow from operations. However, as a counter to these strengths, we find that the company's return on equity has been disappointing. Highlights from the ratings report include:
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Commercial Banks industry and the overall market, HERITAGE COMMERCE CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- HTBK, with its decline in revenue, slightly underperformed the industry average of 0.1%. Since the same quarter one year prior, revenues slightly dropped by 7.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- HERITAGE COMMERCE CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HERITAGE COMMERCE CORP reported poor results of -$5.02 versus -$1.22 in the prior year. This year, the market expects an improvement in earnings ($0.12 versus -$5.02).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Banks industry. The net income increased by 138.4% when compared to the same quarter one year prior, rising from -$4.12 million to $1.58 million.
- Powered by its strong earnings growth of 107.50% and other important driving factors, this stock has surged by 36.91% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.