Stellar Bancorp

STEL

Banks - Regional · Financial Services

Price

$39.32

+0.01 (+0.03%)

Market Cap

$2.00B

Exchange

New York Stock Exchange

Winston Score

Winston is curious

Mixed quality — meaningful strengths and weaknesses.

Share count rising — dilution

+79.4% over 4y

The company has issued more shares over this period, which dilutes each existing shareholder’s stake.

Diluted shares outstanding: 28.9M (2021) → 51.8M (2025)

Stellar Bancorp is a regional bank headquartered in Houston, Texas. It offers everyday banking services like checking and savings accounts, loans, and treasury management tools, mainly to small and medium-sized businesses across Texas. The bank was formed in 2022 when Stellar Financial and Independent Financial Group merged, making it one of the larger community-focused banks in the Houston area.

Stellar makes money the traditional banking way — it collects deposits and lends that money out at higher interest rates, earning the difference. It operates primarily in Texas, with a strong presence in Houston and other major Texas markets, and reported roughly $9 billion in total assets. Its competitive edge comes from deep local relationships with business customers in one of the fastest-growing states in the country, but its main risk is exposure to interest rate changes, since rising or falling rates directly affect how much profit it earns on loans.

Winston Score History

Score breakdown

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Quality

Gross Margin

71.0%

Premium pricing power — 71.0% gross margin

Operating Margin

23.2%

Excellent — 23.2% operating margin

ROCE

1.8%

Weak — 1.8% return on capital

ROIC between 0% and 5%. They earn a few cents back per dollar invested in the business.

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Growth

Sales YoY

-4.3%

Shrinking sales (-4.3% YoY)

EPS YoY

-5.5%

Earnings shrinking (-5.5% YoY)

Slight earnings drop. Typical near a cyclical low.

EPS Consistency

2/8 quarters

Earnings rarely grow — volatile business

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Cash Flow

Cash Conversion

113%

Turns 113% of profit into real cash

FCF Margin

19.6%

Converts sales into free cash efficiently (19.6%)

FCF margin between 10% and 20%. Every $100 in sales becomes $10 to $20 in real cash.

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Stability

Debt / Equity

0.11

Conservative — low debt load (0.11)

Interest Cover

0.77x

Dangerous — barely covers interest (0.8x)

Interest coverage below 1. Their profits don't cover the interest bill.

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Valuation

P/E Ratio (TTM)

19.2x

Fair value — P/E 19.2

P/E in the normal range. Price is roughly $15 for every $1 of yearly profit.

P/E vs Forward

+1.5

GROWING

Earnings expected to grow — slightly cheaper on forward P/E

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Dividends

Dividend Yield

1.50%

Small dividend — 1.50% yield

Modest yield. The bulk of any return needs to come from price appreciation.

Dividend Growth

+7.3%

Dividend growing modestly (7.3% YoY)

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