June 29, 2023
Top 10 Stock Texas Capital Bancshares Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Texas Capital Bancshares – Top 10 Stock in S&P Mid-Cap Index
Texas Capital Bancshares is listed as a top 10 stock on June 29, 2023 in the market index S&P MIDCAP because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. While the company shows high growth, the stock price is high yet professional investor sentiment is low, which may be due to overly optimistic investor behavior, reflected in a low stock price value. Based on the Obermatt 360° View of 64 (high 64% performer), Obermatt assesses an overall buy recommendation for Texas Capital Bancshares on June 29, 2023.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Regional Banks |
| Index | Diversity USA, NASDAQ, D.J. US Banks, S&P MIDCAP |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Texas Capital Bancshares Buy
| 360 METRICS | June 29, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 23 |
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| GROWTH | ||||||||
| GROWTH | 69 |
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| SAFETY | ||||||||
| SAFETY | 99 |
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| SENTIMENT | ||||||||
| SENTIMENT | 37 |
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| 360° VIEW | ||||||||
| 360° VIEW | 64 |
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ANALYSIS: With an Obermatt 360° View of 64 (better than 64% compared with alternatives), overall professional sentiment and financial characteristics for the stock Texas Capital Bancshares are above average. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Texas Capital Bancshares. The consolidated Growth Rank has a good rank of 69, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. This means that growth is higher than for 69% of competitors in the same industry. In addition, the consolidated Safety Rank has a safer rank of 99 which means that the company has a financing structure that is safer than 99% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the consolidated Value Rank has a less desirable rank of 23 which means that the share price of Texas Capital Bancshares is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. This means that the stock price is higher than for 77% of alternative stocks in the same industry. The consolidated Sentiment Rank also has a low rank of 37, which means that professional investors are more pessimistic about the stock than for 63% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated 360° View of 64, Texas Capital Bancshares is better positioned than 64% of all alternative stock investment opportunities based on the Obermatt Method. As only half of the consolidated Obermatt Ranks exhibit excellent performance, the picture is ambiguous. Growth is above-average (Growth Rank of 69), and the company is safely financed (Safety Rank of 99). However, professional market sentiment is low(Sentiment Rank of 37). The negative market view on Texas Capital Bancshares may be due to the high stock price (low value). A growth company like this may get too expensive at one point in time. If too many investors are desperate to board the train, they may drive stock prices above reasonable levels. It is typical for growth companies to have low value ratings, because investors are willing to pay more for companies that outperform their competitors. So the question is, how much more do you pay for the stock of Texas Capital Bancshares compared with alternatives? You can use the following rule of thumb: The value rank shouldn’t be lower than one hundred minus the growth rank. For example, if the growth rank is at 75, and the value rank is at 5, you should tread carefully. If the value rank is at 40, it still might be a good value if the value rank is above 60. As market sentiment is low, you should be careful with paying more than market-average for this stock and conduct further research into the company’s future growth potential. ...read more
Sentiment Strategy: Professional Market Sentiment for Texas Capital Bancshares only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 37 (better than 37% compared with alternatives), overall professional sentiment and engagement for the stock Texas Capital Bancshares is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with three out of four metrics below average for Texas Capital Bancshares. Analyst Opinions are at a rank of 44 (worse than 56% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 50, which means that stock research experts have found something to make them more positive about investing in the company. In other words, they are getting more optimistic of stock investments in Texas Capital Bancshares. But the Professional Investors rank is low at 48, which means that professional investors hold less stock in this company than in 52% of alternative investment opportunities. Pros tend to invest in other companies. Market Pulse is also low at a rank of 28, which means that the current professional news and professional social networks tend to be negative when discussing this company (more negative news than for 72% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 37 (less encouraging than 63% compared with investment alternatives), Texas Capital Bancshares has a reputation among professional investors that is below that of its competitors. These are quite a few negative sentiment signals. One may want to trust the analysts that are changing their opinions. They may be early indications of better times, especially if the company is a smaller one. But If they are an extra large company, they should have more professional stockholders than are currently present. ...read more
Value Strategy: Texas Capital Bancshares Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 23 (worse than 77% compared with alternatives), Texas Capital Bancshares shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, where half the indicators are below and half above average for Texas Capital Bancshares. Price-to-Sales (P/S) is 67, which means that the stock price compared with what market professionals expect for future sales is lower than for 67% of comparable companies, indicating a good value concerning Texas Capital Bancshares's revenue size. The same is valid for the Price-to-Book Capital ratio (also referred to as market-to-book ratio), which is more favorable than for 58% of alternatives (42% of peers have a higher ratio). But expected dividend yields with a Dividend Yield rank of 1 are lower than average (dividends are expected to be lower than 99% of other stocks) while the Price to Profit ratio (or Price to Earnings (P/E) ratio) is higher than average with a Price-to-Profit Rank of 6, making the stock more expensive compared with the company's expected profit levels. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 23, is a sell recommendation based on Texas Capital Bancshares's stock price compared with the company's operational size and dividend yields. Low profits and low dividends as seen here for Texas Capital Bancshares may indicate a restructuring phase. This could be transitory, making the company a good value when profits recover and dividends return to higher levels. If the stock price is compared with the size indicators for revenue and invested capital, it is on the lower side, making this stock a good value investment (apart from current profit and dividend expectations). ...read more
Growth Strategy: Texas Capital Bancshares Growth Momentum good
ANALYSIS: With an Obermatt Growth Rank of 69 (better than 69% compared with alternatives), Texas Capital Bancshares shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Texas Capital Bancshares. Profit Growth has a rank of 96, which means that currently professionals expect the company to grow its profits more than 96% of its competitors. This is a good sign for shareholders, which is confirmed by an above-average Stock Returns rank of 73 (above 73% of alternative investments). But Sales Growth has a below the median rank of 20, which means that, currently, professionals expect the company to grow less than 80% of its competitors, and Capital Growth also has a lower rank of 49. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 69, is a buy recommendation for growth and momentum investors. Because revenues and invested capital are the more solid growth indicators, the positive development on the profit side is less relevant. It may have been caused by cost-cutting, which may be a negative growth indicator. Finally, the above-average stock returns recently are a thing of the past and not a good indicator of future returns. Investors should be confident that the cost-cutting initiative leading to higher profits is to benefit the company's future. If not, there is little growth momentum, and investment is only advisable if the Value Ranks suggest a good investment timing for Texas Capital Bancshares. ...read more
Safety Strategy: Texas Capital Bancshares Debt Financing Safety very solid
| SAFETY METRICS | June 29, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 34 |
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| REFINANCING | ||||||||
| REFINANCING | 92 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 93 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 99 |
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ANALYSIS: With an Obermatt Safety Rank of 99 (better than 99% compared with alternatives) for 2023, the company Texas Capital Bancshares has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Texas Capital Bancshares is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above-average for Texas Capital Bancshares. Refinancing is at 92, meaning the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 92% of its competitors. Liquidity is also good at 93, meaning the company generates more profit to service its debt than 93% of its competitors. This indicates that the company is safer when it comes to debt service. However, Leverage is rather large at 34, which means the company has an above-average debt-to-equity ratio. It has more debt than 66% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 99 (better than 99% compared with alternatives), Texas Capital Bancshares has a financing structure that is significantly safer than that of its competitors. This is not bad if things go well. The higher debt level means better returns to shareholders if things go well. Many top-performing companies operate with higher debt levels, and Texas Capital Bancshares could be in that group. But if you expect the environment to turn rougher, the higher leverage could become a problem. The same is valid if you expect interest rates to rise. That could squeeze shareholder returns, which so far have benefitted from better conditions. ...read more
Combined financial peformance: Texas Capital Bancshares Top Financial Performance
| COMBINED PERFORMANCE | June 29, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 23 |
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| GROWTH | ||||||||
| GROWTH | 69 |
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| SAFETY | ||||||||
| SAFETY | 93 |
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| COMBINED | ||||||||
| COMBINED | 83 |
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ANALYSIS: With an Obermatt Combined Rank of 83 (better than 83% compared with investment alternatives), Texas Capital Bancshares (Regional Banks, USA) shares have much better financial characteristics than comparable stocks. Shares of Texas Capital Bancshares are low in value (priced high) with a consolidated Value Rank of 23 (worse than 77% of alternatives). But they show above-average growth (Growth Rank of 69) and are safely financed (Safety Rank of 99, which means below-average debt burdens). ...read more
RECOMMENDATION: A Combined Rank of 83, is a strong buy recommendation based on Texas Capital Bancshares's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Texas Capital Bancshares exhibits low value (Obermatt Value Rank of 23), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 69). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 99) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). ...read more
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