NEW YORK ( TheStreet) -- Heritage Commerce (Nasdaq: HTBK) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, expanding profit margins, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
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- The revenue growth came in higher than the industry average of 25.3%. Since the same quarter one year prior, revenues slightly increased by 1.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- 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 31.2% when compared to the same quarter one year prior, rising from $1.58 million to $2.08 million.
- The gross profit margin for HERITAGE COMMERCE CORP is currently very high, coming in at 91.50%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, HTBK's net profit margin of 13.70% significantly trails the industry average.
- Compared to its closing price of one year ago, HTBK's share price has jumped by 32.12%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- HERITAGE COMMERCE CORP reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, HERITAGE COMMERCE CORP turned its bottom line around by earning $0.28 versus -$5.02 in the prior year. For the next year, the market is expecting a contraction of 10.7% in earnings ($0.25 versus $0.28).
-- Written by a member of TheStreet Ratings Staff