Heritage Commerce (HTBK) Soars 5.3%: Is Further Upside Left in the Stock?

Heritage Commerce (HTBK) shares soared 5.3% in the last trading session to close at $12.84. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 5.4% gain over the past four weeks.

Heritage Commerce witnessed a rise in share price for the second consecutive day. The performance of banks is expected improve on rising interest rates and decent loan demand. The Federal Reserve is expected to hike the interest rates again by 75 basis points (bps) next month (having already increased the rates by 300 bps so far this year) as the inflation continues to be stubborn. This, thus, led to bullish investor sentiments, which drove HTBK stock higher.

This holding company for Heritage Bank of Commerce is expected to post quarterly earnings of $0.28 per share in its upcoming report, which represents a year-over-year change of +21.7%. Revenues are expected to be $47.3 million, up 16.5% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Heritage Commerce, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on HTBK going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Heritage Commerce is a member of the Zacks Banks - West industry. One other stock in the same industry, Hanmi Financial (HAFC), finished the last trading session 5.8% higher at $25.48. HAFC has returned 0.5% over the past month.

Hanmi Financial's consensus EPS estimate for the upcoming report has changed +0.9% over the past month to $0.78. Compared to the company's year-ago EPS, this represents a change of -9.3%. Hanmi Financial currently boasts a Zacks Rank of #1 (Strong Buy).

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