Univest Co. of Pennsylvania (NASDAQ: UVSP) and Heritage Financial (NASDAQ:HFWA) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their risk, analyst recommendations, dividends, institutional ownership, profitability, valuation and earnings.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Univest Co. of Pennsylvania and Heritage Financial, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Univest Co. of Pennsylvania 0 2 1 0 2.33
Heritage Financial 0 2 1 0 2.33

Univest Co. of Pennsylvania presently has a consensus price target of $32.67, suggesting a potential upside of 15.63%. Heritage Financial has a consensus price target of $30.67, suggesting a potential downside of 5.35%. Given Univest Co. of Pennsylvania’s higher probable upside, analysts clearly believe Univest Co. of Pennsylvania is more favorable than Heritage Financial.

Dividends

Univest Co. of Pennsylvania pays an annual dividend of $0.80 per share and has a dividend yield of 2.8%. Heritage Financial pays an annual dividend of $0.52 per share and has a dividend yield of 1.6%. Univest Co. of Pennsylvania pays out 52.3% of its earnings in the form of a dividend. Heritage Financial pays out 37.7% 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.

Volatility & Risk

Univest Co. of Pennsylvania has a beta of 0.6, indicating that its share price is 40% less volatile than the S&P 500. Comparatively, Heritage Financial has a beta of 0.46, indicating that its share price is 54% less volatile than the S&P 500.

Earnings and Valuation

This table compares Univest Co. of Pennsylvania and Heritage Financial’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Univest Co. of Pennsylvania $182.57 million 4.48 $19.50 million $1.53 18.46
Heritage Financial $170.13 million 5.70 $38.91 million $1.38 23.48

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

Profitability

This table compares Univest Co. of Pennsylvania and Heritage Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Univest Co. of Pennsylvania 18.71% 8.35% 0.99%
Heritage Financial 23.48% 8.42% 1.05%

Insider and Institutional Ownership

70.8% of Univest Co. of Pennsylvania shares are owned by institutional investors. Comparatively, 78.1% of Heritage Financial shares are owned by institutional investors. 3.6% of Univest Co. of Pennsylvania shares are owned by insiders. Comparatively, 2.7% of Heritage Financial shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

Heritage Financial beats Univest Co. of Pennsylvania on 8 of the 14 factors compared between the two stocks.

About Univest Co. of Pennsylvania

Univest Corporation of Pennsylvania is the bank holding company of Univest Bank and Trust Co. (the Bank). The Bank is a Pennsylvania state-chartered bank and trust company. The Company’s business segments include Banking, Wealth Management and Insurance. The Banking segment provides financial services, such as deposit taking, loan origination and servicing, mortgage banking, other general banking services and equipment lease financing. The Wealth Management segment offers trust and investment advisory services, guardian and custodian of employee benefits and other trust and brokerage services, as well as a registered investment advisory managing private investment accounts for both individuals and institutions. The Insurance segment includes a full-service insurance brokerage agency offering commercial property and casualty insurance, group life and health coverage, employee benefit solutions, personal insurance lines and human resources consulting.

About Heritage Financial

Heritage Financial Corporation is a bank holding company. The Company is engaged in the business of planning, directing and coordinating the business activities of its bank subsidiary, Heritage Bank (the Bank). The Bank’s lending activities focus on commercial business lending. The Bank also originates consumer loans, real estate construction and land development loans, and one- to four-family residential loans. The Bank’s investment securities available for sale include the United States treasury and the United States Government-sponsored agencies; municipal securities; mortgage-backed securities and collateralized mortgage obligations, which include residential and commercial; collateralized loan obligations; corporate obligations, and other securities. The Bank’s primary sources of funds are deposits and loan repayments. Borrowings are used on a short-term basis to compensate for reductions in other sources of funds, such as deposit inflows.

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