Texas Capital (TCBI) Earnings Anticipated to Increase: Is it Time to Invest?

Texas Capital (TCBI) is looking poised to report a rise in earnings compared to last year due to an increase in revenues when it reveals its quarterly results for the period ending December 2024. This widely expected consensus outlook provides insight into the company's earnings potential, but the actual results may play a critical role in affecting the stock's short-term performance.

If the upcoming earnings report surpasses expectations, it could result in a rise in the stock price. However, if the results fall short, the stock might experience a decline.

The comments from management regarding business conditions during the earnings call will largely influence the sustainability of any immediate stock price changes and future earnings expectations. Thus, it’s useful to analyze the likelihood of a positive earnings per share (EPS) surprise.

Zacks Consensus Estimate

As the holding company for Texas Capital Bank, TCBI is anticipated to report earnings of $1.07 per share for the upcoming quarter, marking a significant year-over-year increase of approximately 64.6%.

Revenues are predicted to reach $284.2 million, representing a growth of 15.6% compared to the previous year’s quarter.

Estimate Revisions Trend

Over the last month, the consensus EPS estimate has seen a slight downward revision of 1.27%, reflecting how covering analysts have collectively updated their initial estimates during this timeframe.

It’s essential for investors to understand that an overall change may not accurately represent the individual direction of estimate revisions made by each analyst involved.

Earnings Whisper

Revisions of estimates prior to a company's earnings release can provide valuable insights into the business environment for the upcoming results. This analysis is central to our proprietary surprise prediction model known as the Zacks Earnings ESP (Expected Surprise Prediction).

The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the upcoming quarter. The Most Accurate Estimate is the latest version of the Zacks Consensus EPS estimate. The notion is that analysts who revise their estimates just before an earnings release may have access to the most relevant information, which could be more precise than earlier predictions.

A positive or negative Earnings ESP can indicate the potential disparity of the actual earnings in relation to the consensus estimate. However, the model’s accuracy tends to be strong only for positive ESP readings.

A positive Earnings ESP also acts as a solid forecast for an earnings beat, especially when combined with a Zacks Rank of #1 (Strong Buy), #2 (Buy), or #3 (Hold). Research indicates that stocks exhibiting this combination tend to produce a positive earnings surprise roughly 70% of the time, and a strong Zacks Rank boosts the predictive prowess of Earnings ESP.

On the contrary, a negative Earnings ESP does not necessarily signal an earnings miss. Research indicates that accurately predicting an earnings beat for stocks with negative Earnings ESP readings and/or a Zacks Rank of #4 (Sell) or #5 (Strong Sell) is notably difficult.

How Have the Numbers Shaped Up for Texas Capital?

In the context of Texas Capital, the Most Accurate Estimate is currently positioned higher than the Zacks Consensus Estimate. This suggests that analysts have recently grown more optimistic regarding the company’s earnings prospects. Consequently, this situation yields an Earnings ESP of +2.04%.

Moreover, the stock presently holds a Zacks Rank of #3, indicating that there is a good likelihood that Texas Capital will outperform the consensus EPS estimate.

Does Earnings Surprise History Hold Any Clue?

When analysts project future earnings, they often review how well the company has previously aligned with consensus estimates. Thus, examining the surprise history can be helpful for gauging its potential impact on upcoming results.

In the last reported quarter, there were expectations for Texas Capital to generate earnings of $0.97 per share; however, it actually reported earnings of $1.62, resulting in a surprise of +67.01%.

Over the past four quarters, the company has surpassed consensus EPS expectations on two occasions.

Bottom Line

Whether a company beats or misses expectations may not be the sole determinant of its stock price movement. Many stocks tend to decline in value despite beating earnings expectations due to other disheartening factors. Conversely, unexpected positive developments can lead to stock gains even after an earnings miss.

Texas Capital seems to stand out as a strong candidate for an earnings beat. However, investors should also consider additional factors when deciding whether to invest or abstain from this stock ahead of its earnings announcement.

Stay informed on upcoming earnings announcements with the Zacks Earnings Calendar.

Texas, Earnings, Investment