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Relative valuation derived from Financials sector median benchmarks. Model weights: EV/EBITDA (40%), P/B (35%), P/S (25%). Multiples adjusted for extreme outliers and non-recurring volatility.
Auditing capital efficiency...
Quality Profile Audit
Score: 49.4GRADE C
Composite assessment of profitability, capital efficiency, and financial strength. Top-tier entities demonstrate sustainable cash flow generation.
Return on Equity
Profit generated per dollar of shareholder equity
6.6%
Sector: 8.5%
Dividend Analysis audit
GROWTH
1.85%
Trailing Yield
$1.85
Per $100 Invested
Modest dividend — capital prioritized for reinvestment.
Est. Payout Ratio
31%SAFE
Analyst Projections
Analyst Consensus
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Based on our 6-factor quantitative model, Stellar Bancorp, Inc. (STEL) receives a "Hold" rating with a composite score of 55.0/100, ranked #797 out of 4446 stocks. Key factor scores: Quality 49/100, Value 66/100, Momentum 62/100. This is quantitative analysis only — not investment advice.
Stellar Bancorp, Inc. (STEL) Stock Analysis — April 2026 Rating, Price, and Forecast
Company Overview — What Does Stellar Bancorp, Inc. Do?
CBTX, Inc. operates as the bank holding company for CommunityBank of Texas, National Association that provides commercial banking products and services to small and mid-sized businesses, and professionals in the United States. The company offers demand, money market, savings, and time deposit accounts, as well as certificates of deposit; commercial and industrial, commercial real estate, construction and development, 1-4 family residential mortgage, multi-family residential, consumer, and agricultural loans; and treasury and online banking services. It operates through 34 banking locations, including 18 branches in Houston; 15 branches in Beaumont; and one branch in Dallas. The company was formerly known as CBFH, Inc. and changed its name to CBTX, Inc. in September 2017. CBTX, Inc. was incorporated in 2007 and is headquartered in Beaumont, Texas. Stellar Bancorp, Inc. (STEL) is classified as a small-cap stock in the Financials sector, specifically within the Banking industry. The company is led by CEO Robert R. Franklin and employs approximately 1,020 people. With a market capitalization of $1.9B, STEL is one of the notable companies in the Financials sector.
Stellar Bancorp, Inc. (STEL) Stock Rating — Hold (April 2026)
As of April 2026, Stellar Bancorp, Inc. receives a Hold rating with a composite score of 55.0/100 and 3 out of 5 stars from the Blank Capital Research quantitative model.STEL ranks #797 out of 4,446 stocks in our coverage universe. Within the Financials sector, Stellar Bancorp, Inc. ranks #236 of 891 stocks, placing it in the upper half of its Financials peers. The rating is generated by a multi-factor model that weighs quality (30%), momentum (25%), value (15%), investment (10%), stability (10%), and short interest (10%).
STEL Stock Price and 52-Week Range
Stellar Bancorp, Inc. (STEL) currently trades at $37.43. The stock lost $0.29 (0.8%) in the most recent trading session. The 52-week high for STEL is $40.21, which means the stock is currently trading -6.9% from its annual peak. The 52-week low is $24.13, putting the stock 55.2% above its annual trough. Recent trading volume was 296K shares, suggesting relatively thin trading activity.
Is STEL Overvalued or Undervalued? — Valuation Analysis
Stellar Bancorp, Inc. (STEL) carries a value factor score of 66/100 in the Blank Capital model, indicating fair valuation relative to historical norms. The trailing price-to-earnings ratio is 16.89x, compared to the Financials sector average of 14.88x — a premium of 14%. The price-to-book ratio stands at 1.12x, versus the sector average of 1.22x. The price-to-sales ratio is 297.33x, compared to 0.90x for the average Financials stock. On an enterprise value basis, STEL trades at 11.56x EV/EBITDA, versus 3.26x for the sector.
Overall, STEL's valuation appears roughly in line with sector benchmarks, suggesting the market is pricing the stock fairly given its current fundamentals and growth trajectory. Neither deep value nor significantly overpriced, the stock occupies a middle ground on valuation.
Stellar Bancorp, Inc. Profitability — ROE, Margins, and Quality Score
Stellar Bancorp, Inc. (STEL) earns a quality factor score of 49/100, signaling below-average profitability metrics relative to the broader market. The return on equity (ROE) is 6.6%, compared to the Financials sector average of 8.5%, which is below typical expectations for high-quality companies. Return on assets (ROA) comes in at 1.0% versus the sector average of 1.2%.
On a margin basis, Stellar Bancorp, Inc. reports gross margins of 0.0%. The operating margin is 2208.6% (sector: 21.8%). Net profit margin stands at 1758.8%, versus 17.7% for the average Financials stock. Revenue growth is running at -98.6% on a trailing basis, compared to 9.4% for the sector. Profitability is below benchmark levels, which may reflect industry headwinds, elevated reinvestment, or structural challenges.
STEL Debt, Balance Sheet, and Financial Health
Stellar Bancorp, Inc. has a debt-to-equity ratio of 548.0%, compared to the Financials sector average of 121.0%. This elevated leverage warrants close monitoring, as it increases the company's sensitivity to rising interest rates and economic downturns. The current ratio is 1.18x, suggesting adequate working capital coverage. Total debt on the balance sheet is $70M. Cash and equivalents stand at $99M.
STEL has a beta of 0.70, meaning it is less volatile than the S&P 500, making it a relatively defensive holding. The stability factor score for Stellar Bancorp, Inc. is 85/100, indicating low-volatility characteristics and consistent price behavior that appeals to risk-averse investors.
Stellar Bancorp, Inc. Revenue and Earnings History — Quarterly Trend
In TTM 2026, Stellar Bancorp, Inc. reported revenue of $6M and earnings per share (EPS) of $1.99. Net income for the quarter was $111M. Gross margin was 0.0%. Operating income came in at $139M.
In FY 2025, Stellar Bancorp, Inc. reported revenue of $6M and earnings per share (EPS) of $1.99. Net income for the quarter was $103M. Revenue grew -98.5% year-over-year compared to FY 2024. Operating income came in at $128M.
In Q3 2025, Stellar Bancorp, Inc. reported revenue of $2M and earnings per share (EPS) of $0.50. Net income for the quarter was $26M. Revenue grew -3.1% year-over-year compared to Q3 2024. Operating income came in at $32M.
In Q2 2025, Stellar Bancorp, Inc. reported revenue of $2M and earnings per share (EPS) of $0.51. Net income for the quarter was $26M. Revenue grew -98.5% year-over-year compared to Q2 2024. Operating income came in at $33M.
Over the past 8 quarters, Stellar Bancorp, Inc. has experienced revenue contraction from $107M to $6M. Investors analyzing STEL stock should weigh these quarterly trends alongside the valuation and quality metrics discussed above.
STEL Dividend Yield and Income Analysis
Stellar Bancorp, Inc. (STEL) currently pays a dividend yield of 1.8%. At this yield, a $10,000 investment in STEL stock would generate approximately $$185.00 in annual dividend income. This compares to the Financials sector average dividend yield of 2.5%, meaning STEL yields less than the typical sector peer. With a net margin of 1758.8%, the dividend appears well-covered by earnings, suggesting sustainable payouts going forward.
STEL Momentum and Technical Analysis Profile
Stellar Bancorp, Inc. (STEL) has a momentum factor score of 62/100, reflecting neutral trend characteristics. The stock is neither significantly outperforming nor underperforming the broader market on a momentum basis. The investment factor score is 40/100, which measures capital allocation efficiency and asset growth patterns. The short interest score of 22/100 signals elevated short interest, which can indicate bearish sentiment among institutional investors.
STEL vs Competitors — Financials Sector Ranking and Peer Comparison
Comparing STEL against the S&P 500 benchmark is also instructive for understanding relative performance. Investors can view the full STEL vs S&P 500 (SPY) comparison to assess how Stellar Bancorp, Inc. stacks up against the broader market across all factor dimensions.
STEL Next Earnings Date
No upcoming earnings date has been announced for Stellar Bancorp, Inc. (STEL) at this time. Check the earnings calendar for the latest scheduling updates across all stocks in our coverage universe.
Should You Buy STEL? — Investment Thesis Summary
Stellar Bancorp, Inc. presents a balanced picture with arguments on both sides. The value score of 66/100 suggests attractive pricing relative to fundamentals. Price momentum is positive at 62/100, suggesting the trend favors buyers. Low volatility (stability score 85/100) reduces downside risk.
In summary, Stellar Bancorp, Inc. (STEL) earns a Hold rating with a composite score of 55.0/100 as of April 2026. The rating is derived from the Blank Capital Research methodology, which combines six factor dimensions into a single quantitative ranking. Investors should consider these quantitative signals alongside their own fundamental research, risk tolerance, and investment time horizon before making buy or sell decisions on STEL stock.
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Institutional Research Dossier
Stellar Bancorp, Inc. (STEL) Deep Dive Analysis
Published on March 24, 2026
Action RatingHold
Sections
Executive Summary
We maintain a Hold rating on Stellar Bancorp (STEL). While the company exhibits strengths in stability and value, as indicated by its high Stability score (84/100) and relatively attractive Value score (67/100), significant concerns arise from its negative revenue growth and declining profitability metrics compared to historical performance and sector peers. The current valuation appears fair, but the lack of clear growth catalysts and the potential for further margin compression warrant a cautious approach.
The primary driver of our Hold rating is the substantial revenue decline and the unsustainable operating and net margins, which are likely due to accounting anomalies or one-time gains that are not reflective of the underlying business. While the company's strong balance sheet and conservative capital allocation provide a buffer against downside risks, the absence of consistent revenue growth and the potential for margin reversion limit the upside potential, justifying a neutral stance.
Business Strategy & Overview
Stellar Bancorp, operating through its subsidiary CommunityBank of Texas, focuses on providing commercial banking services to small and mid-sized businesses and professionals, primarily in the Houston and Beaumont, Texas areas. The bank's strategy centers around relationship-based banking, aiming to build long-term partnerships with its clients by offering a range of deposit, loan, and treasury management products. This localized approach allows the bank to cater to the specific needs of its target market, fostering customer loyalty and potentially reducing credit risk through a deeper understanding of the local economy.
The company's revenue generation is primarily derived from net interest income, which is the difference between the interest earned on loans and investments and the interest paid on deposits. Additionally, Stellar Bancorp generates fee income from services such as treasury management, online banking, and other banking-related activities. The bank's strategic focus on commercial lending suggests a higher risk-adjusted return profile compared to consumer lending, but it also exposes the bank to greater cyclicality and credit risk associated with business cycles.
Stellar Bancorp operates in a highly competitive banking landscape, facing competition from larger national and regional banks, as well as smaller community banks and credit unions. To differentiate itself, the bank emphasizes personalized service, local market expertise, and quick decision-making. However, the increasing prevalence of online banking and fintech solutions poses a challenge to traditional brick-and-mortar banks like Stellar Bancorp, requiring ongoing investments in technology and digital capabilities to remain competitive.
The company's branch network, consisting of 34 locations across Houston, Beaumont, and Dallas, provides a physical presence for customer interactions and deposit gathering. However, the efficiency of this branch network is crucial for maintaining profitability, as operating costs associated with physical branches can be significant. The bank's ability to optimize its branch network and leverage technology to enhance customer service and reduce costs will be critical for long-term success.
Execution Benchmarks audit
Revenue Growth
YOY expansion rate
-98.6%
Sector: 9.4%
-1151% VS SCTR
Economic Moat Analysis
Stellar Bancorp's economic moat is likely Narrow. While the company benefits from some degree of customer relationships and local market knowledge, these advantages are not substantial enough to create a wide and sustainable competitive advantage. The banking industry is inherently competitive, with numerous players offering similar products and services, making it difficult for any single bank to establish a dominant position.
The company's focus on relationship-based banking can create some switching costs for customers, as businesses may be reluctant to change banks due to established relationships and familiarity with the bank's personnel and processes. However, these switching costs are not insurmountable, as customers can easily switch to competing banks offering better rates, services, or technology. The commoditized nature of banking products and the increasing availability of online banking options further reduce switching costs.
Stellar Bancorp's local market expertise in the Houston and Beaumont areas provides a slight advantage in understanding the local economy and assessing credit risk. However, this advantage is not unique, as other local banks and credit unions also possess similar knowledge. Furthermore, larger national and regional banks have the resources to conduct thorough market research and analysis, mitigating the information advantage of smaller local banks.
The company does not appear to possess any significant cost advantages or efficient scale. Its operating and net margins, while exceptionally high in the most recent TTM and quarterly data, are likely unsustainable and not reflective of underlying cost efficiencies. The bank's size and scale are relatively small compared to larger competitors, limiting its ability to achieve economies of scale in areas such as technology, marketing, and regulatory compliance.
Intangible assets, such as brand recognition and reputation, can contribute to a bank's economic moat. However, Stellar Bancorp's brand recognition is likely limited to its local markets and does not extend nationally. While the bank may have a positive reputation within its community, this is not a sufficient basis for a wide economic moat.
Financial Health & Profitability
Stellar Bancorp's financial health presents a mixed picture. The company's revenue has experienced a dramatic decline, with TTM revenue at $6.28 million compared to $431.04 million in FY2024 and $590.82 million in FY2023. This represents a significant contraction and raises concerns about the sustainability of the business model. The sector average revenue growth is 9.3%, highlighting the company's underperformance.
Despite the revenue decline, the company's net income remains positive at $102.87 million for the TTM period, although lower than the $115.00 million in FY2024 and $130.50 million in FY2023. The operating and net margins are extraordinarily high at 2,208.6% and 1,758.8% respectively, which are significantly above the sector averages of 22.0% and 17.8%. These margins are likely unsustainable and may be due to one-time gains or accounting anomalies.
The company's return on equity (ROE) is 6.6%, which is below the sector average of 8.5%. This indicates that the company is not generating as much profit from shareholders' equity compared to its peers. The current ratio is 1.18, suggesting adequate liquidity to meet short-term obligations.
The company's debt-to-equity ratio is 548.00, which is significantly higher than the sector average of 115.00. This indicates a higher level of leverage, which could increase financial risk. However, the company also has a substantial cash balance of $99.41 million, which provides some cushion against debt obligations.
Free cash flow (FCF) data is inconsistent across reporting periods. While FY2024 shows a healthy FCF of $117.82 million, the TTM FCF is reported as $98.52 million, and quarterly FCF data is not available. This inconsistency makes it difficult to assess the company's cash flow generation capabilities accurately.
Valuation Assessment
Stellar Bancorp's valuation metrics present a mixed picture. The company's price-to-earnings (P/E) ratio is 17.9x, which is slightly higher than the sector average of 15.5x. This suggests that the stock is trading at a slight premium compared to its peers. However, the P/E ratio may be distorted by the unusually high net income resulting from the aforementioned revenue decline and margin anomaly.
The company's enterprise value-to-EBITDA (EV/EBITDA) ratio is 2.9x, which is lower than the sector average of 3.5x. This suggests that the company is undervalued based on its earnings before interest, taxes, depreciation, and amortization. However, the EV/EBITDA ratio may also be distorted by the unusually high EBITDA resulting from the aforementioned revenue decline and margin anomaly.
Given the significant revenue decline and the unsustainable operating and net margins, it is difficult to assess the company's valuation accurately using traditional metrics. The current valuation may appear attractive based on the low EV/EBITDA ratio, but this is likely misleading due to the distorted financial results.
A more conservative valuation approach would involve normalizing the company's revenue and margins to reflect historical performance and sector averages. This would likely result in a lower valuation, suggesting that the stock is fairly valued or slightly overvalued. The lack of clear growth catalysts and the potential for margin reversion further support a cautious valuation assessment.
Considering the company's current financial performance and the uncertainties surrounding its future growth prospects, the current valuation appears fair. However, investors should closely monitor the company's revenue and margin trends to assess whether the current valuation is justified.
Risk & Uncertainty
Stellar Bancorp faces several specific risks that could negatively impact its business and financial performance. The most significant risk is the dramatic revenue decline observed in the most recent TTM data. If this trend continues, the company's profitability and financial health could be severely compromised. The reasons for this revenue decline need to be thoroughly investigated and addressed.
Another risk is the potential for margin reversion. The company's operating and net margins are currently exceptionally high, but these margins are likely unsustainable and may be due to one-time gains or accounting anomalies. If these margins revert to historical levels or sector averages, the company's profitability could decline significantly.
The company also faces credit risk associated with its commercial lending activities. A downturn in the local economy or specific industries could lead to increased loan defaults and losses, negatively impacting the company's earnings and capital. The company's concentration in the Houston and Beaumont, Texas areas exposes it to regional economic risks.
Competition from larger national and regional banks, as well as smaller community banks and credit unions, poses a constant threat to Stellar Bancorp's market share and profitability. The increasing prevalence of online banking and fintech solutions further intensifies competition, requiring ongoing investments in technology and digital capabilities.
Bulls Say / Bears Say
The Bull Case
BULL VIEWStellar Bancorp's strong balance sheet and high Stability score (84/100) provide a solid foundation for weathering economic downturns and pursuing strategic opportunities.
BULL VIEWThe company's low EV/EBITDA ratio (2.9x) suggests that the stock is undervalued and offers potential upside for investors.
BULL VIEWManagement's focus on relationship-based banking and local market expertise can create customer loyalty and sustainable competitive advantages.
The Bear Case
BEAR VIEWThe dramatic revenue decline in the most recent TTM data raises serious concerns about the company's long-term growth prospects and sustainability.
BEAR VIEWThe unsustainable operating and net margins are likely to revert to historical levels, leading to a significant decline in profitability.
BEAR VIEWThe company's high debt-to-equity ratio (548.00) increases financial risk and limits its flexibility to pursue growth initiatives.
About the Author
Marques Blank
Founder & Chief Investment Officer, Blank Capital
Marques brings 15 years of institutional finance and investing experience, having overseen financial planning for a $1.6B defense business unit. He developed the proprietary 6-factor quantitative model used to score STEL and 4,400+ other equities.
Stellar Bancorp, Inc. exhibits a 8299% valuation premium relative to institutional benchmarks. This represents a potential valuation overextension based on current multiples.
Return on Assets
Efficiency of asset utilization
1.0%
Sector: 1.2%
Gross Margin
Pricing power and cost efficiency
0.0%
Sector: 0.0%
Operating Margin
Core business profitability
2208.6%
Sector: 21.8%
Net Margin
Bottom-line profitability
1758.8%
Sector: 17.7%
Factor Methodology
The Quality factor evaluates the persistence and magnitude of cash flows. Companies with scores >70 exhibit superior competitive moats and financial resilience through economic cycles.
Sector Avg Yield2.48%
Yield Delta-25%
Income Projection audit
A $10,000 investment would generate approximately $185 annually in dividends at the current trailing rate.
