Is Heritage Commerce Corp. overvalued or undervalued?

As of 22 May 2025, Heritage Commerce Corp. has moved from a fair to a very attractive valuation grade, indicating a significant improvement in its perceived value. The company is currently undervalued, with a P/E ratio of 14, which is notably lower than its peers, such as Coastal Financial Corp. at 25.69 and Premier Financial Corp. at 14.14. Additionally, Heritage Commerce Corp. has a price-to-book value of 0.84, suggesting that the market is valuing the company below its book value, which further supports the undervaluation thesis.
In terms of performance metrics, the company's return on equity (ROE) stands at 6.03%, while its return on capital employed (ROCE) is at a concerning -136.56%. Despite these mixed results, the peer comparison highlights that Heritage Commerce Corp. is positioned favorably against its competitors, particularly with a lower valuation multiple. The stock has outperformed the S&P 500 over the past year, returning 20.28% compared to the index's 10.26%, reinforcing the notion that it is currently undervalued in the market.