Texas Capital (TCBI) Earnings Expected to Grow: Should You Buy?

Texas Capital Bancshares, Inc. (TCBI) is poised to report strong earnings in its forthcoming quarter ending December 2024, with projections indicating a significant year-over-year growth. Analysts forecast that the company will achieve earnings of $1.07 per share, marking an impressive increase of 64.6% compared to the prior year. Moreover, revenues are set to reach approximately $284.2 million, reflecting a 15.6% uptick from the same quarter last year. This optimistic forecast indicates that investors should closely monitor the upcoming earnings announcement.

The actual performance of Texas Capital in relation to these estimates can have a substantial impact on the stock’s price. If the financial results exceed expectations, it may lead to an increase in the stock’s value. Conversely, if the outcomes fall short, the stock could experience a decline.

Management's comments regarding business conditions during the earnings call will play a vital role in shaping both immediate stock reactions and future earnings predictions. Understanding the likelihood of a positive earnings surprise can provide valuable insights for investors.

Zacks Consensus Estimate

The current consensus estimate for Texas Capital’s upcoming quarterly earnings sits at $1.07 per share. This estimate signifies a strong growth potential for the company, making it an interesting prospect for investors.

Estimate Revisions Trend

Over the past month, the consensus EPS estimate has seen a slight downward adjustment of 1.27%. This change reflects how analysts are re-evaluating their predictions. It’s important for investors to recognize that while the overall trend has moved down, individual analysts may have varying perspectives on the company's earnings.

Earnings Whisper

Changes in earnings estimates prior to an earnings release can offer critical insights into the prevailing business environment. The Zacks Earnings ESP (Expected Surprise Prediction) metric is particularly useful for this analysis. This model compares the Most Accurate Estimate to the Zacks Consensus Estimate, highlighting any recent adjustments analysts have made based on fresh information.

A positive Earnings ESP suggests a higher likelihood of an earnings beat, especially when paired with a Zacks Rank of #1 (Strong Buy), #2 (Buy), or #3 (Hold). Research indicates that stocks exhibiting this combination tend to deliver positive surprises approximately 70% of the time, enhancing the predictive accuracy of the Earnings ESP.

It's worth noting that a negative Earnings ESP doesn’t necessarily imply an earnings miss, but predicting an earnings beat in such scenarios can be challenging. Stocks with low Zacks Ranks (4 or 5) have uncertain paths regarding earnings surprises.

Recent Performance Overview

In Texas Capital's case, the Most Accurate Estimate exceeds the Zacks Consensus Estimate, indicating an optimistic sentiment among analysts regarding the company’s earnings outlook. This results in a positive Earnings ESP of +2.04%, with the stock maintaining a Zacks Rank of #3.

This combination places Texas Capital in a good position to potentially surpass consensus EPS estimates for the upcoming quarter.

Surprise History Insights

When analysts evaluate a company’s earnings potential, they often consider past performance against consensus estimates. Texas Capital's historical surprise pattern shows that last quarter, the company exceeded expectations by reporting earnings of $1.62 per share against an initial estimate of $0.97, achieving a remarkable surprise of 67.01%.

Over the last four quarters, Texas Capital has succeeded in beating earnings estimates two times, suggesting a mixed but encouraging performance history.

Conclusion

While an earnings beat can influence stock prices, it isn’t the sole factor in market movements. Stocks may decline despite positive earnings due to other disappointing aspects, while some can rise even after an earnings miss due to unexpected positive catalysts.

Investing in stocks with anticipated earnings beats may enhance investment success rates. Therefore, utilizing the Earnings ESP and Zacks Rank prior to earnings announcements proves beneficial. Texas Capital stands out as a promising earnings-beat candidate, but investors should also consider other influencing factors before making investment decisions. For a comprehensive update on upcoming earnings reports, keep an eye on the earnings calendar.

Earnings, Stocks, Investing