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Heritage Insurance Holdings (HRTG): analysis traps
Where its figures could mislead a reader, and what to check before taking them at face value · Data: Q3 2026, to Sep 30, 2026, filed Nov 6, 2026; rules v1.1
Heritage Insurance Holdings (HRTG): 1 rule of 10 triggered on the filings to Sep 30, 2026: EPS growth = profit growth; 2 with insufficient data; 5 not applicable. Each is a question to verify, with the normal explanation that would produce the same figures.
Check these first
EPS growth = profit growth Triggered · severity medium · confidence high
EPS rose 6% in Q3 2026 (1.62 → 1.72) while net income was flat ($50M → $51M): the diluted share count fell 4.0%, and most of the EPS growth is the smaller denominator.
Innocent reading: Buybacks at prices below the shares' value do add value per share; the question is the price paid and how they were financed.
Every rule
A01 FCF growth = the business improved Not applicable
a financial company: free cash flow after capex is not the measure of its business
A07 Stock compensation added back = no economic cost Not triggered confidence high
Stock compensation is 0.6% of revenue: small enough that adding it back changes little.
The figures and how they are read
| Fiscal year | FY2025 |
| Stock compensation | $5M |
| Revenue | $847M |
| SBC / revenue | +0.6% |
| Buybacks | $2M |
| Buybacks / SBC | 0.4 |
| Diluted shares, year before | 30.7M shares |
| Diluted shares | 30.9M shares |
| Diluted shares: change | +1.0% |
SBC / revenue from the cash flow statement's add-back; the diluted weighted share count year over year; buybacks from the financing section
Source: FY2025 (stock compensation, buybacks and the diluted share count, fiscal year)
B02 Receivables growing = future cash is certain Not applicable
a financial company: receivables and DSO are not its working capital
B08 Adjusted profit = economic profit Insufficient data
no reconciliation table read from the releases yet and fewer than three quarters with both an adjusted and a GAAP EPS
C02 Low net debt = no refinancing risk Not triggered confidence medium
$4M comes due within a year, 191.1× covered by cash and investments of $532M plus $184M of free cash flow.
The figures and how they are read
| Cash and investments | $532M |
| Debt | $70M |
| Net debt | −$462M |
| Due within a year | $4M |
| Read from | the debt maturity table |
| Free cash flow, twelve months | $184M |
| Cash plus free cash flow | $717M |
| Coverage of what is due | 191.1 |
| Due in the second year | $4M |
| Balance sheet date | 2026-09-30 |
due within a year from the maturity table (else the current portion of debt), against cash and investments plus free cash flow over the last twelve months (zero if negative); no credit lines assumed
Source: FY2025 (debt maturities, cash and investments)
D03 EPS growth = profit growth Triggered severity medium · confidence high
EPS rose 6% in Q3 2026 (1.62 → 1.72) while net income was flat ($50M → $51M): the diluted share count fell 4.0%, and most of the EPS growth is the smaller denominator.
The figures and how they are read
| Quarter | Q3 2026 |
| Quarter before | Q3 2025 |
| EPS, year before | $1.62 |
| EPS | $1.72 |
| Net income, year before | $50M |
| Net income | $51M |
| Diluted shares, year before | 31.0M shares |
| Diluted shares | 29.8M shares |
| EPS growth | +5.6% |
| Net income growth | +1.4% |
| Diluted shares: change | -4.0% |
| eps from profit | $0.02 |
| eps from share count | $0.07 |
| EPS growth from the share count | +4.2% |
EPS and net income against the same quarter a year earlier; the EPS bridge attributes the change to profit first, then to the share count (the order is fixed and disclosed)
Source: Q3 2026 (net income, diluted shares, EPS) · Q3 2025 (the same quarter a year earlier)
What would explain it innocently
- Buybacks at prices below the shares' value do add value per share; the question is the price paid and how they were financed
- A one-off item depressed this quarter's net income
- Shares were cancelled after a disposal whose proceeds were returned
What to look for in the filing
- The average price paid for the buybacks against the shares' value
- Whether the buybacks were funded by debt
- Next quarter's net income trend
What would show the trap does not apply
- Net income grows at the pace of EPS in the next two quarters
- The buybacks were made below the shares' later value (the share count fell and book value per share rose)
Look again: next filing.
E02 Low P/E at a cyclical peak = undervalued Not applicable
a financial company: J06 reads its cycle instead
E07 A precise DCF value = the true value Insufficient data
no DCF in the valuation research for this company
J06 A bank's low P/E and high profit = safe Not applicable
not a bank
J08 A REIT's low net income = the dividend is unsafe Not applicable
not a REIT
What the statuses mean
Triggered: the filings show the pattern; read the normal explanations and the missing evidence before concluding anything. To review: one quarter or a weak signal; a reader's judgement, not a pattern. Not triggered: the pattern is absent on these figures. Insufficient data: the filings read so far do not hold what the rule needs; this is not a clean bill. Not applicable: the rule is not meant for this kind of company (a bank's working capital, a loss-making quarter's EPS growth). Out of date: the latest filing is more than fifteen months old.
Severity is what the pattern could mean for cash, value or solvency; confidence is how reliable the inputs and the reading are. The two are kept apart.
Record a view
A reader's judgement, grounds, what would change it and the next review; kept in the browser (needs JavaScript).
Every rule and the companies it triggers on → Heritage Insurance Holdings: cash flow →
Each rule reads the company's own filings by a fixed formula and says what would explain the same figures innocently. A triggered rule is a question to verify, not a finding of manipulation, and not a view on the stock. Missing data is shown as missing, never as clear. Not investment advice.