Is Texas Capital Bancshares, Inc. overvalued or undervalued?

As of 18 January 2024, the valuation grade for Texas Capital Bancshares, Inc. has moved from fair to expensive, indicating a shift towards overvaluation. The company is currently considered overvalued, with a P/E ratio of 35, significantly higher than its peers such as UMB Financial Corp. at 19.64 and Comerica, Inc. at 21.53. Additionally, the Price to Book Value stands at 1.02, and the EV to EBIT ratio is 4.08, both suggesting that the company's valuation metrics are elevated compared to its industry counterparts.
In terms of performance, Texas Capital Bancshares has shown a 1-year return of 22.16%, outperforming the S&P 500's return of 17.14%, but it lags behind the S&P 500 over the longer term with a 3-year return of 40.91% compared to the S&P's 70.41%. This mixed performance, combined with high valuation ratios, reinforces the conclusion that the stock is currently overvalued.