Is Now the Right Moment for Texas Capital Shares After Recent Price Swings in 2025?

Thinking about Texas Capital Bancshares and wondering whether now is the right time to make a move? You are not alone. The company's stock has been on a bit of a rollercoaster lately, with a dip of 1.6% over the past week and a 7.5% slide in the last month. That might sound gloomy on the surface, but if we widen the lens, Texas Capital has still managed a 2.7% gain so far this year and an impressive 40.8% return over the past three years. For the truly patient, the five-year return stands at 84.4%, which is no small feat in the world of regional banks.

What is causing all this movement? Recent changes in broader banking sector sentiment have certainly played a part. As investors reassess risk in financials, Texas Capital's evolving positioning and strategy seem to have stirred up both optimism and healthy skepticism. These are typical ingredients for the kind of price swings we've seen. Ultimately, when we talk about whether it is time to buy, hold, or walk away, it comes down to the stock's underlying value.

To measure that, it is helpful to look at a value score, which adds a point for each of the six valuation checks the company is considered undervalued on. For Texas Capital, the score sits at 2 out of 6. On paper, that hints at some pockets of value, but maybe not the deep bargain some might hope for.

Let us break down how this score is calculated, look at what the main valuation indicators tell us, and, most importantly, explore how a smarter way to measure value could make all the difference in your next investing decision.

Texas Capital Bancshares scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Texas Capital Bancshares Excess Returns Analysis

The Excess Returns valuation model focuses on how effectively a company generates profits from its existing capital base, above and beyond the expected return for its shareholders. In other words, it measures whether the bank is putting its money to work in a way that beats the market’s minimum required returns.

For Texas Capital Bancshares, analysts currently estimate a Book Value of $70.17 per share and project a Stable Book Value of $79.73 per share over time. Meanwhile, the Stable EPS is forecast at $7.03 per share, based on the average outlook of 13 analysts. The Cost of Equity comes in at $5.54 per share, resulting in an Excess Return of $1.49 per share. The company’s expected average Return on Equity is 8.82%, reflecting efficiency in deploying its resources compared to peers.

The Excess Returns model estimates the intrinsic value at $118.15 per share. This is roughly 33.2% above the recent share price, suggesting that Texas Capital Bancshares trades at a meaningful discount to what the company could be worth based on its expected capital returns.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Texas Capital Bancshares.

Our Excess Returns analysis suggests Texas Capital Bancshares is undervalued by 33.2%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Texas Capital Bancshares Price vs Earnings

For profitable companies like Texas Capital Bancshares, the price-to-earnings (PE) ratio is often the most widely used valuation metric. This is because PE focuses directly on what investors are paying for each dollar of current earnings, which is particularly relevant when evaluating established, profit-generating businesses.

Of course, what counts as a “normal” or “fair” PE ratio depends on factors such as the company’s expected earnings growth, risk profile, and how it compares to wider industry trends. Generally, companies with higher growth prospects or lower perceived risk command higher PE multiples, while riskier or slower-growth firms tend to trade at lower ratios.

Currently, Texas Capital Bancshares trades at a PE ratio of 30.90x. This is slightly above the peer group average of 30.15x and well above the industry average of 11.23x. While those comparisons are useful, they do not paint the full picture, since each bank has its own unique growth outlook, risk factors, profit margins, and size.

This is where the Simply Wall St “Fair Ratio” comes into play. The proprietary Fair Ratio model calculates what PE multiple a company deserves based on its specific fundamentals: growth expectations, risk, profit margin, industry norms, and market capitalization. Unlike a simple peer or sector comparison, the Fair Ratio approach gives investors a more nuanced and relevant benchmark for today’s market conditions.

For Texas Capital Bancshares, the Fair Ratio is 17.82x. With the current PE ratio of 30.90x, the stock is trading notably above its Fair Ratio. This suggests that, even after adjusting for all the important company and industry-specific factors, Texas Capital Bancshares is priced at a premium relative to what its fundamentals justify.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Texas Capital Bancshares Narrative

Earlier we mentioned there is an even better way to understand valuation, so let us introduce you to Narratives. Narratives are a simple but powerful framework that lets investors describe the story they believe about a company and connect it directly to their specific forecasts of future revenue, earnings, margins, and ultimately, fair value.

With Narratives, you do not just crunch numbers; you create a big-picture view that links your perspective on Texas Capital Bancshares to real financial outcomes. This approach is easy and accessible on Simply Wall St's platform, right on the Community page where millions of investors share their views.

Narratives help guide your buy or sell decisions by constantly comparing each user’s fair value estimate to the latest share price, updating automatically as new information such as earnings announcements or industry news emerges.

For example, some investors currently see a bright future, targeting a fair value as high as $102 per share for Texas Capital Bancshares based on expectations for robust Sunbelt growth and digital innovation, while others set a more cautious target at $79, factoring in economic concentration risks and competitive threats.

With Narratives, you can easily compare and sense-check these perspectives for yourself, see how your own expectations stack up, and make smarter investment decisions grounded in both data and insight.

Do you think there's more to the story for Texas Capital Bancshares? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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