MeritValue

HERITAGE FINANCIAL CORP /WA/

HFWAdata completeness 88%17 fiscal years on file

Data notes: no data for concept 'totalDebt'

The thesis, from the filings

HERITAGE FINANCIAL CORP /WA/ earns about 24% on invested capital, far above its ~9% cost of capital, and has bought back 4% of its shares over 5 years — the marks of a durable business run for its owners. The estimate methods put fair value between $20.31 and $70.61 a share.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2021FY 2022FY 2023FY 2024FY 2025
Revenue$212.8M1$227.5M2$284.5M3$309.7M3$314.2M3
Net income$98M4$81.9M5$61.8M6$43.3M6$67.5M6
Operating cash flow$69.5M7$94.5M8$109.5M9$64.5M9$94.8M9
Capital expenditure$3.02M10$4.02M11$10.4M12$3.46M12$9.16M12
Free cash flow (derived)$66.5M7$90.4M8$99.1M9$61M9$85.7M9
Total debt—————
Cash & equivalents$1.72B13$103.6M14$225M15$117.1M16$233.1M16
Diluted shares36.0M35.5M35.3M34.9M34.5M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$267.44
your share of equity
Profit it earned you last year
$19.6
Free cash flow it threw off
$24.86
Debt you’d be carrying
—

10 shares is a claim on $267.44 of net worth that earned you $19.6 and generated $24.86 of cash last year.

iii. Is this a good business?
Moat signal · return on invested capital
24% avg · 5y
FY21 —FY22 13%FY23 18%FY24 29%FY25 38%

It earned about 24% on invested capital, year after year, against a ~9% cost of capital — the footprint of real pricing power. Competition usually drags returns like this back down; here it hasn't.

seeing a moat in the numbers →
Management signal · capital allocation
−4% shares · 5y

Share count is down 4% over 5 years — management has been buying back stock, quietly handing owners a bigger slice.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.1.0

The 3 estimate methods that apply put fair value between $20.31 and $70.61 a share. They rest on different assumptions, so where they diverge is the story; the Graham Number is a stricter floor, not a target.

DCF · Growth Exit 10Y
$70.61
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears10
  • fcfGrowth8.8%
  • fcfBase$85.7M
DCF · Growth Exit 5Y
$58.54
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears5
  • fcfGrowth8.8%
  • fcfBase$85.7M
Earnings Power Value
$20.31
assumptions (8)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • normalizedEarnings$67.5M
  • growthAssumed0.0%
Graham Number
$34.34
assumptions (1)
  • grahamMultiplier2250.0%

Different models answer different questions — which to trust when →

v. The price question — last, on purpose
Is today’s price fair?
See live price ↗
Type a price. The ledger answers.
Or set your own belief
FCF growth, next 5 years8.8%
Discount rate (WACC)8.93%
Terminal growth2.5%
At your growth, a share is worth $58.54
The three cases
Bear0.0%$42.29
Base8.8%$58.54
Bull13.8%$70.27

Bear/base/bull growth = 0% / filed history / history + 5pp. Type a price to see the return each case implies.

Default growth 8.8%= this company’s own filed history (median-to-median FCF CAGR, clamped 0–20%). Your adjustments are recorded anonymously. They become the “what do owners actually believe” dataset.

Sources — the receipts
  1. 10-K · period ending 2021-12-31 · accession 0001046025-24-000015 (InterestAndDividendIncomeOperating)
  2. 10-K · period ending 2022-12-31 · accession 0001046025-25-000046 (InterestAndDividendIncomeOperating)
  3. 10-K · period ending 2023-12-31 · accession 0001628280-26-012703 (InterestAndDividendIncomeOperating)
  4. 10-K · period ending 2021-12-31 · accession 0001046025-24-000015 (NetIncomeLoss)
  5. 10-K · period ending 2022-12-31 · accession 0001046025-25-000046 (NetIncomeLoss)
  6. 10-K · period ending 2023-12-31 · accession 0001628280-26-012703 (NetIncomeLoss)
  7. 10-K · period ending 2021-12-31 · accession 0001046025-24-000015 (NetCashProvidedByUsedInOperatingActivities)
  8. 10-K · period ending 2022-12-31 · accession 0001046025-25-000046 (NetCashProvidedByUsedInOperatingActivities)
  9. 10-K · period ending 2023-12-31 · accession 0001628280-26-012703 (NetCashProvidedByUsedInOperatingActivities)
  10. 10-K · period ending 2021-12-31 · accession 0001046025-24-000015 (PaymentsToAcquirePropertyPlantAndEquipment)
  11. 10-K · period ending 2022-12-31 · accession 0001046025-25-000046 (PaymentsToAcquirePropertyPlantAndEquipment)
  12. 10-K · period ending 2023-12-31 · accession 0001628280-26-012703 (PaymentsToAcquirePropertyPlantAndEquipment)
  13. 10-K · period ending 2021-12-31 · accession 0001046025-23-000039 (CashAndCashEquivalentsAtCarryingValue)
  14. 10-K · period ending 2022-12-31 · accession 0001046025-24-000015 (CashAndCashEquivalentsAtCarryingValue)
  15. 10-K · period ending 2023-12-31 · accession 0001046025-25-000046 (CashAndCashEquivalentsAtCarryingValue)
  16. 10-K · period ending 2024-12-31 · accession 0001628280-26-012703 (CashAndCashEquivalentsAtCarryingValue)