Live Oak Bancshares (NASDAQ:LOB) and Heritage Commerce (NASDAQ:HTBK) Head to Head Analysis

Live Oak Bancshares (NASDAQ:LOBGet Rating) and Heritage Commerce (NASDAQ:HTBKGet Rating) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, risk, valuation, profitability, earnings, analyst recommendations and dividends.

Insider & Institutional Ownership

62.2% of Live Oak Bancshares shares are owned by institutional investors. Comparatively, 71.5% of Heritage Commerce shares are owned by institutional investors. 25.7% of Live Oak Bancshares shares are owned by insiders. Comparatively, 4.1% of Heritage Commerce shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Live Oak Bancshares and Heritage Commerce’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Live Oak Bancshares $521.41 million 2.87 $166.99 million $3.59 9.52
Heritage Commerce $162.94 million 3.97 $47.70 million $0.82 13.06

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

Dividends

Live Oak Bancshares pays an annual dividend of $0.12 per share and has a dividend yield of 0.4%. Heritage Commerce pays an annual dividend of $0.52 per share and has a dividend yield of 4.9%. Live Oak Bancshares pays out 3.3% of its earnings in the form of a dividend. Heritage Commerce pays out 63.4% 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.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Live Oak Bancshares and Heritage Commerce, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Live Oak Bancshares 0 0 3 0 3.00
Heritage Commerce 0 0 2 0 3.00

Live Oak Bancshares presently has a consensus price target of $63.00, suggesting a potential upside of 84.37%. Heritage Commerce has a consensus price target of $13.50, suggesting a potential upside of 26.05%. Given Live Oak Bancshares’ higher probable upside, research analysts plainly believe Live Oak Bancshares is more favorable than Heritage Commerce.

Profitability

This table compares Live Oak Bancshares and Heritage Commerce’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Live Oak Bancshares 30.72% 23.36% 1.95%
Heritage Commerce 29.69% 8.33% 0.92%

Volatility & Risk

Live Oak Bancshares has a beta of 1.54, indicating that its stock price is 54% more volatile than the S&P 500. Comparatively, Heritage Commerce has a beta of 1.02, indicating that its stock price is 2% more volatile than the S&P 500.

Summary

Live Oak Bancshares beats Heritage Commerce on 11 of the 15 factors compared between the two stocks.

Live Oak Bancshares Company Profile (Get Rating)

Live Oak Bancshares, Inc. operates as the bank holding company for Live Oak Banking Company that provides various commercial banking products and services to individuals, small businesses, and professionals in North Carolina, the United States. The company accepts various deposit products, including noninterest-bearing demand, as well as interest-bearing checking, money market, savings, and time deposits. It also offers commercial and industrial loans; construction and development loans; owner occupied and non-owner occupied collateral commercial real estate loans; and commercial land loans. In addition, the company provides settlement, accounting, and securitization services for government guaranteed loans; wealth and investment management services to high-net-worth individuals and families; investment advisory services to a series of funds focused on providing venture capital to new and emerging financial technology companies; and an on-site restaurant location to company employees and business visitors. Live Oak Bancshares, Inc. was incorporated in 2008 and is headquartered in Wilmington, North Carolina.

Heritage Commerce Company Profile (Get Rating)

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. The company operates through 17 full-service branch offices located in the general San Francisco Bay Area of California. Heritage Commerce Corp was founded in 1994 and is headquartered in San Jose, California.

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