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Spirit of Texas (STXB) Hits 52-Week High, Can the Run Continue?

Shares of Spirit of Texas Bancshares (STXB) have been strong performers lately, with the stock up 6.2% over the past month. The stock hit a new 52-week high of $24.94 in the previous session. Spirit of Texas Bancshares has gained 47.6% since the start of the year compared to the 20.4% move for the Zacks Finance sector and the 34.7% return for the Zacks Banks - Southeast industry.

What's Driving the Outperformance?

The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on April 21, 2021, Spirit of Texas reported EPS of $0.58 versus consensus estimate of $0.47.

For the current fiscal year, Spirit of Texas is expected to post earnings of $2.16 per share on $129 million in revenues. This represents a 19.89% change in EPS on a 3.36% change in revenues. For the next fiscal year, the company is expected to earn $1.89 per share on $128.1 million in revenues. This represents a year-over-year change of -12.67% and -0.7%, respectively.

Valuation Metrics

Spirit of Texas may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.

On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.

Spirit of Texas has a Value Score of B. The stock's Growth and Momentum Scores are C and C, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 11.5X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 10.8X versus its peer group's average of 12.9X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Spirit of Texas currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Spirit of Texas meets the list of requirements. Thus, it seems as though Spirit of Texas shares could still be poised for more gains ahead.

How Does Spirit of Texas Stack Up to the Competition?

Shares of Spirit of Texas have been rising, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also solid potential picks, including Hancock Whitney (HWC), Ameris Bancorp (ABCB), and South State (SSB), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.

The Zacks Industry Rank is in the top 14% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Spirit of Texas, even beyond its own solid fundamental situation.

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Spirit of Texas Bancshares, Inc. (STXB): Free Stock Analysis Report
Ameris Bancorp (ABCB): Free Stock Analysis Report
South State Corporation (SSB): Free Stock Analysis Report
Hancock Whitney Corporation (HWC): Free Stock Analysis Report
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