Is it Wise to Hold onto Texas Capital (TCBI) Stock Now?
On May 23, we issued an updated research report on Texas Capital Bancshares, Inc. TCBI. Increasing revenues along with easing margin pressure are driving the company’s performance. However, escalating expenses remain a concern.
Texas Capital’s shares have gained 52.2% in the last one year, significantly outperforming the the Zacks categorized Banks - Southwest industry’s 26.4% rally.
The company’s current-year earnings estimates declined 1.5% over the last 30 days, but it carries a Zacks Rank #3 (Hold).
The company has been benefiting from growth in average earning assets. Its revenues have seen a compounded annual growth rate of 12% over the last five years (2012–2016). The revenue growth is expected to continue, supported by its diverse fee income sources.
Further, after years of margin pressure, Texas Capital reported an expanding NIM (net interest margin) in first-quarter 2017. Margin benefited from the recent Fed rate hikes and higher loan yields. The company expects net interest margin to be in the range of 3.25–3.35% in 2017, up from 3.14% in 2016.
However, the persistently increasing expenses remain a burden for the company despite undertaking several cost-cutting initiatives. Also, its exposure to the energy sector in Texas keeps us apprehensive.
Stocks to Consider
Some better-ranked stocks in the same space include BOK Financial Corporation BOKF, BancFirst Corporation BANF and Citizens Financial Group, Inc. CFG. All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
BOK Financial witnessed an upward earnings estimate revision of 14.0%, over the past 30 days. Also, its share price gained 32.0% over the last one year.
BancFirst's earnings estimates moved upward by 2.3% over the past 30 days, for the current year. Its share price increased 52.9%, over the last one year.
Citizens Financial’s current-year earnings estimates were revised 7.0% upward, over the past 60 days. Over the last one year, its share price surged 48.1%.
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