Texas capital

Texas Capital (TCBI) second-quarter earnings lag estimates

Jexas Capital (TCBI) exited with quarterly earnings of $0.59 per share, missing Zacks’ consensus estimate of $0.74 per share. That compares to earnings of $1.31 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents a profit surprise of -20.27%. A quarter ago, this holding company of Texas Capital Bank was expected to post a profit of $0.73 per share when it actually produced a profit of $0.69, delivering a surprise of – 5.48%.

In the past four quarters, the company has only exceeded consensus EPS estimates once.

Capital of Texas, which is industry-owned Zacks Banks – Southwest, reported revenue of $231.77 million for the quarter ended June 2022, beating Zacks’ consensus estimate of 4.43%. That compares to revenues of $227.1 million a year ago. The company has exceeded consensus revenue estimates twice in the past four quarters.

The sustainability of the immediate stock price movement based on recently released numbers and future earnings forecasts will primarily depend on management’s comments on the earnings call.

Texas Capital shares have lost about 6.8% year-to-date compared to a -16.9% decline for the S&P 500.

What’s next for Texas Capital?

With Texas Capital outperforming the market so far this year, the question on investors’ minds is: what’s next for the stock?

There is no easy answer to this key question, but a reliable measure that can help investors answer it is the company’s earnings outlook. This includes not only current consensus earnings expectations for the upcoming quarter(s), but also how those expectations have changed recently.

Empirical research shows a strong correlation between short-term stock movements and trends in earnings estimate revisions. Investors can track these revisions on their own or rely on a proven scoring tool like Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Prior to this earnings release, the trend in estimate revisions for Texas Capital is mixed. While the magnitude and direction of estimate revisions may change following the release of the company’s earnings report, the current situation translates into a No. 3 (hold) Zacks ranking for the stock. Thus, the shares should move in line with the market in the near future. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how the estimates for the next few quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.96 on $248.14 million in revenue for the upcoming quarter and $3.44 on $931.87 million in revenue for the current fiscal year.

Investors should be aware that the outlook for the sector can also have a significant impact on stock performance. In terms of Zacks industry rankings, Banks – Southwest is currently in the top 27% of Zacks 250+ industries. Our research shows that the top 50% of industries ranked by Zacks outperform the bottom 50% by a factor of more than 2 to 1.

Red River Bancshares (RRBI), another stock in the same sector, has yet to report results for the quarter ending June 2022.

This Red River Bank holding company is expected to post quarterly earnings of $0.96 per share in its next report, representing a year-over-year change of -15%. The consensus EPS estimate for the quarter remained unchanged for the past 30 days.

Red River Bancshares revenue is expected to be $24.26 million, up 2.6% from the prior year quarter.

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Texas Capital Bancshares, Inc. (TCBI): Free Share Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.