Texas capital

Texas Capital Bancshares (NASDAQ:TCBI) profits decline over five years, contributing to a 23% loss for shareholders

Texas Capital Bancshares, Inc. (NASDAQ:TCBI) Shareholders should be pleased to see the stock price rise 22% in the last quarter. But if you look at the last five years, the returns have not been good. You would have been much better off buying an index fund, since the stock has fallen 23% over that half-decade.

With the stock up 3.8% last week but long-term shareholders still in the red, let’s see what the fundamentals can tell us.

While markets are a powerful pricing mechanism, stock prices reflect investor sentiment, not just underlying trading performance. One way to look at how market sentiment has changed over time is to look at the interaction between a company’s stock price and its earnings per share (EPS).

Looking back five years, Texas Capital Bancshares’ share price and EPS have both declined; the latter at a rate of 1.9% per annum. Readers should note that the stock price fell faster than EPS, at a rate of 5% per year, over the period. This implies that the market was previously too bullish on the stock.

You can see how EPS has changed over time in the image below (click on the graph to see the exact values).

NasdaqGS: TCBI Earnings Per Share Growth as of September 20, 2022

It is good to see that there has been significant insider buying over the past three months. This is a positive point. On the other hand, we believe revenue and earnings trends are much more meaningful measures of the business. Dive deeper into earnings with this interactive chart of earnings, revenue, and cash flow from Texas Capital Bancshares.

A different perspective

It’s good to see that Texas Capital Bancshares has rewarded shareholders with a total shareholder return of 14% over the past twelve months. This certainly exceeds the loss of about 4% per year over the last half-decade. This makes us a little suspicious, but the company may have changed course. If you want to research this stock further, the insider buying data is an obvious place to start. You can click here to see who bought shares – and the price they paid.

There are many other companies whose insiders buy shares. You probably do not want to miss this free list of growing companies insiders are buying.

Please note that the market returns quoted in this article reflect the average market-weighted returns of stocks currently trading on US exchanges.

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