Stellar Bancorp (STEL) AI Stock Analysis

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Stellar Bancorp

(NYSE:STEL)

75Outperform

Stellar Bancorp demonstrates strong financial health and growth prospects, supported by a robust balance sheet and positive earnings call insights. However, technical indicators reflect mixed trends, and valuation metrics suggest the stock is fairly priced. While the company has a strong strategic focus on growth, challenges such as increased credit loss provisions and rising expenses could pose risks.

Stellar Bancorp (STEL) vs. S&P 500 (SPY)

Market Cap

$1.31B

Dividend Yield2.17%

Average Volume (3M)270.64K

Price to Earnings (P/E)11.6

Beta (1Y)0.93

Revenue Growth1.68%

EPS Growth-10.31%

CountryUS

Employees1,023

SectorFinancial

Sector Strength86

IndustryBanks - Regional

Share Statistics

EPS (TTM)2.20

Shares Outstanding52,266,727

10 Day Avg. Volume311,856

30 Day Avg. Volume270,639

Financial Highlights & Ratios

PEG Ratio1.21

Price to Book (P/B)N/A

Price to Sales (P/S)3.26

Price to Cash Flow (P/CF)92.40

P/FCF Ratio9.80

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$30.33

Price Target Upside21.86% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering3

Stellar Bancorp Business Overview & Revenue Model

Company DescriptionStellar Bancorp, Inc. (STEL) is a financial holding company that provides a wide range of banking and financial services. As a prominent player in the financial sector, the company operates through its subsidiaries to offer commercial and retail banking services, including loan and deposit products, cash management, and online banking solutions. Stellar Bancorp is dedicated to serving businesses and individuals by facilitating their financial growth and stability.

How the Company Makes MoneyStellar Bancorp generates revenue primarily through the interest income from its loan portfolio, which includes commercial, real estate, and consumer loans. The company also earns money from non-interest income sources such as fees and service charges on deposit accounts, transaction and ATM fees, and income from investments and securities. Additionally, Stellar Bancorp may form strategic partnerships with other financial institutions or service providers to enhance its offerings and expand its market reach, contributing to its overall earnings.

Stellar Bancorp Financial Statement Overview

Summary

Stellar Bancorp exhibits a strong financial position with impressive growth in revenue and profitability. The balance sheet is robust, characterized by no debt, substantial equity, and effective capital management. Cash flows are generally positive, though fluctuations in investing and financing activities could warrant closer monitoring.

Income Statement

Very Positive

Stellar Bancorp has shown strong revenue growth with a consistent increase in total revenue over the years. The net profit margin is solid, indicating efficient cost management. The company has managed to maintain a healthy EBIT margin, although the lack of EBITDA data in recent years could limit a full analysis of operational efficiency.

Balance Sheet

Very Positive

The balance sheet indicates strong financial stability with no total debt and a high equity ratio, reflecting a well-capitalized position. The return on equity remains robust, showcasing effective utilization of shareholder funds. The increasing stockholders' equity further highlights the company's financial health.

Cash Flow

Positive

Stellar Bancorp's cash flow statements depict a stable operating cash flow, with free cash flow remaining positive. There's a noticeable fluctuation in investing and financing cash flows, which may suggest varying capital allocation strategies. The operating cash flow to net income ratio is healthy, supporting the company's profitability.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
602.40M	461.32M	309.31M	140.64M	141.94M
	Gross Profit
602.40M	590.82M	309.31M	140.64M	141.94M
	EBIT
588.85M	177.44M	96.56M	45.52M	32.40M
	EBITDA
0.00	196.35M	0.00	0.00	38.00M
	Net Income Common Stockholders
115.00M	130.50M	51.43M	35.60M	26.36M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.09B	1.52B	2.18B	1.31B	538.01M
	Total Assets
10.91B	10.65B	10.90B	4.49B	3.95B
	Total Debt
70.11M	159.76M	173.29M	64.14M	66.45M
	Net Debt
-419.97M	-239.47M	-198.41M	-886.00M	-471.56M
	Total Liabilities
9.30B	9.13B	9.52B	64.14M	66.45M
	Stockholders Equity
1.61B	1.52B	1.38B	562.13M	546.45M
Cash Flow		Free Cash Flow
132.62M	161.36M	105.25M	34.05M	26.80M
	Operating Cash Flow
132.62M	168.22M	109.07M	34.81M	40.36M
	Investing Cash Flow
246.09M	295.25M	73.76M	-133.96M	-304.41M
	Financing Cash Flow
133.27M	-435.94M	-568.63M	511.29M	429.99M

Stellar Bancorp Technical Analysis

Technical Analysis Sentiment

Negative

Last Price24.89

Price Trends

50DMA

27.72

Negative

100DMA

28.39

Negative

200DMA

27.04

Negative

Market Momentum

MACD

-0.15

Negative

RSI

48.28

Neutral

STOCH

60.53

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For STEL, the sentiment is Negative. The current price of 24.89 is below the 20-day moving average (MA) of 26.73, below the 50-day MA of 27.72, and below the 200-day MA of 27.04, indicating a bearish trend. The MACD of -0.15 indicates Negative momentum. The RSI at 48.28 is Neutral, neither overbought nor oversold. The STOCH value of 60.53 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for STEL.

Stellar Bancorp Risk Analysis

Stellar Bancorp disclosed 57 risk factors in its most recent earnings report. Stellar Bancorp reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Stellar Bancorp Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SRCE	75 Outperform	$1.32B	9.92	12.51%	2.66%	12.26%	7.48%
CUBI	75 Outperform	$1.38B	8.62	10.44%	―	-3.61%	-29.58%
STEL	75 Outperform	$1.31B	11.63	7.52%	2.17%	1.68%	-10.31%
STBA	73 Outperform	$1.26B	9.65	9.85%	4.07%	5.36%	-8.74%
GABC	68 Neutral	$1.28B	12.14	12.16%	3.19%	11.44%	-2.75%
NBHC	68 Neutral	$1.29B	11.00	9.41%	3.36%	6.24%	-17.05%
Sector *	64 Neutral	$13.37B	9.30	9.39%	4.85%	16.11%	-8.85%

* Financial Sector Average

Performance Comparison

STEL

Stellar Bancorp

24.89

2.55

11.41%

SRCE

1St Source

53.42

6.02

12.70%

GABC

German American Bancorp

34.45

3.44

11.09%

STBA

S&T Bancorp

32.89

4.53

15.97%

CUBI

Customers Bancorp

43.80

-2.82

-6.05%

NBHC

National Bank Holdings

33.94

1.54

4.75%

Stellar Bancorp Earnings Call Summary

Earnings Call Date: Jan 30, 2025 | % Change Since: -12.76% | Next Earnings Date: Apr 25, 2025

Earnings Call Sentiment Positive

The earnings call highlights Stellar Bank's strong financial performance, with improvements in net interest margin and regulatory capital ratios, along with promising loan growth momentum. However, challenges include increased provisions for credit losses, a decline in non-interest income, and rising non-interest expenses. The bank's strategic focus on growth and positive economic conditions in its market provide a favorable outlook.

Highlights

Strong Financial Performance

Stellar Bank reported a fourth-quarter net income of $27.8 million, or $0.52 per diluted share, with an annualized ROAA of 1.04% and an annualized ROATCE of 10.82%. For the full year 2024, net income was $117.6 million or $2.20 per diluted share, with an ROAA of 1.1% and an ROATCE of 12.18%.

Net Interest Margin Improvement

Net interest income for the quarter was $103 million, an increase from the $101.5 million in the third quarter. The net interest margin improved to 4.25% in the fourth quarter from 4.19% in the third quarter.

Regulatory Capital Ratios Growth

Total risk-based capital was 16.06% at the end of the fourth quarter, up from 14.02% at the end of 2023 and 12.39% at the end of 2022. Tangible book value per share increased 36.2% from $14.02 to $19.10 after dividends.

Loan Growth Momentum

Fourth quarter loan originations were the highest in six quarters, indicating strong momentum going into 2025.

Lowlights

Provision for Credit Losses

The provision for credit losses on loans in the fourth quarter was $942,000, with a reduction in the allowance for credit losses on loans from $84.5 million to $81.1 million.

Non-Interest Income Decline

Non-interest income for the fourth quarter was $5 million, down from $6.3 million in the third quarter, partly due to a $1.3 million one-time SBIC income and a small gain on asset sales in the previous quarter.

Increased Non-Interest Expenses

Non-interest expense for the fourth quarter was $72 million, up from $71.1 million in the third quarter, with higher professional fees and outside operating expenses noted.

Company Guidance

During Stellar Bank's Q4 earnings call for fiscal year 2024, the management provided guidance indicating a focus on growth and operational efficiency for 2025. Key metrics highlighted in the call included a fourth-quarter net income of $27.8 million, or $0.52 per diluted share, with an annualized return on average assets (ROAA) of 1.04% and an annualized return on average tangible common equity (ROATCE) of 10.82%. For the full year, net income was $117.6 million, or $2.20 per diluted share, with a ROAA of 1.1% and a ROATCE of 12.18%. The net interest margin improved to 4.25% in Q4 from 4.19% in the prior quarter, attributed to a strong non-interest bearing deposit portfolio and improved cost of funds. The bank also noted a provision for credit losses of $942,000, with the allowance for credit losses on loans at $81.1 million, or 1.09% of loans. Looking forward, the bank anticipates modest expense growth aligned with inflation, targeting non-interest expenses to reach about $295 million in 2025, while aiming for positive operating leverage through revenue growth and strategic capital deployment, including potential M&A opportunities.

Stellar Bancorp Corporate Events

Financial Disclosures

Stellar Bancorp Highlights Strong 2024 Profitability at Conference

Positive

Mar 4, 2025

Stellar Bancorp, Inc. presented its Investor Presentation at the 2025 RBC Capital Markets Global Financial Institutions Conference on March 4, 2025. The presentation highlighted the company’s solid profitability in 2024, with a net income of $115 million and a strong net interest margin. Stellar Bancorp also reported an increase in its total risk-based capital ratio and a decrease in nonperforming loans, indicating a stable financial position and positive growth trajectory.

Business Operations and StrategyFinancial Disclosures

Stellar Bancorp Reports Strong Earnings Despite Challenges

Positive

Jan 30, 2025

Stellar Bancorp, Inc. reported a net income of $27.8 million for the fourth quarter of 2024, and $117.6 million for the full year, reflecting strong profitability and a solid financial foundation. The company experienced a slight decline in net interest margin and net interest income compared to the previous year but maintained a strong capital position with increased book value and reduced nonperforming loans. Stellar’s management is focused on growth and core fundamentals heading into 2025, while also acknowledging challenges such as decreased noninterest income and increased competition in the deposit market.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.