MetroCity Bankshares (NASDAQ:MCBS – Get Free Report) and Texas Capital Bancshares (NASDAQ:TCBI – Get Free Report) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, risk, earnings, valuation, analyst recommendations, dividends and institutional ownership.
Risk and Volatility
MetroCity Bankshares has a beta of 0.68, suggesting that its share price is 32% less volatile than the S&P 500. Comparatively, Texas Capital Bancshares has a beta of 0.66, suggesting that its share price is 34% less volatile than the S&P 500.
Insider & Institutional Ownership
25.3% of MetroCity Bankshares shares are held by institutional investors. Comparatively, 96.9% of Texas Capital Bancshares shares are held by institutional investors. 20.2% of MetroCity Bankshares shares are held by company insiders. Comparatively, 1.9% of Texas Capital Bancshares shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Analyst Recommendations
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| MetroCity Bankshares | 0 | 1 | 1 | 0 | 2.50 |
| Texas Capital Bancshares | 1 | 8 | 4 | 0 | 2.23 |
MetroCity Bankshares currently has a consensus target price of $33.00, suggesting a potential downside of 4.80%. Texas Capital Bancshares has a consensus target price of $104.75, suggesting a potential upside of 12.45%. Given Texas Capital Bancshares’ higher possible upside, analysts plainly believe Texas Capital Bancshares is more favorable than MetroCity Bankshares.
Profitability
This table compares MetroCity Bankshares and Texas Capital Bancshares’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| MetroCity Bankshares | 28.40% | 15.16% | 1.82% |
| Texas Capital Bancshares | 17.90% | 10.86% | 1.10% |
Dividends
MetroCity Bankshares pays an annual dividend of $1.16 per share and has a dividend yield of 3.3%. Texas Capital Bancshares pays an annual dividend of $0.80 per share and has a dividend yield of 0.9%. MetroCity Bankshares pays out 40.3% of its earnings in the form of a dividend. Texas Capital Bancshares pays out 10.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.
Earnings & Valuation
This table compares MetroCity Bankshares and Texas Capital Bancshares”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| MetroCity Bankshares | $246.01 million | 4.06 | $68.53 million | $2.88 | 12.04 |
| Texas Capital Bancshares | $2.00 billion | 2.03 | $330.24 million | $7.69 | 12.11 |
Texas Capital Bancshares has higher revenue and earnings than MetroCity Bankshares. MetroCity Bankshares is trading at a lower price-to-earnings ratio than Texas Capital Bancshares, indicating that it is currently the more affordable of the two stocks.
About MetroCity Bankshares
MetroCity Bankshares, Inc. operates as the bank holding company for Metro City Bank that engages in the provision of banking products and services in the United States. It offers customary banking services, such as consumer and commercial checking accounts, savings, and money market accounts, as well as certificates of deposit. The company also provides commercial and consumer loans, including single family residential loans; construction and development, and owner and non-owner occupied commercial real estate loans; letters of credit; and commercial and industrial loans, residential mortgage loans, and SBA loans. In addition, it offers online banking services, which include access to account balances, online transfers, online bill payment, and electronic delivery of customer statements; mobile banking solutions, such as remote check deposit with mobile bill pay; and automated teller machines and telephone banking services. Further, it provides debit cards for checking customers, direct deposits, and cashier's checks; treasury management services, including wire transfer, automated clearing house, and stop payments services; and cash management deposit products, such as remote deposit capture, positive pay, zero balance accounts, and sweep accounts. The company was founded in 2006 and is headquartered in Atlanta, Georgia.
About Texas Capital Bancshares
Texas Capital Bancshares, Inc. operates as the bank holding company for Texas Capital Bank, is a full-service financial services firm that delivers customized solutions to businesses, entrepreneurs, and individual customers. The company offers commercial banking; consumer banking; investment banking solutions, including capital markets, mergers and acquisitions, and syndicated finance, as well as financial sponsor coverage, capital solutions, and institutional services; and wealth management services, such as investment management, financial planning, lockbox and insurance, securities-based lending, estate planning, and business succession, as well as philanthropic, trustee and executor, custom credit, and depository services. It also provides deposit accounts, analyzed accounts, commercial card, SBA and business loans, packaged solutions, and merchant services; liquidity and investments, working capital, international trade and payment, and treasury and credit products; and commercial real estate, homebuilder and community, and mortgage finance. In addition, the company offers payables and receivables management; online and mobile banking; term loans and lines of credit, equipment finance and lease, acquisition finance, and asset-based lending; private wealth advisory solutions; and checking and savings accounts, debit and credit cards, and certificates of deposit, as well as ETF and funds management services. Further, it provides financial institution money market accounts and loan syndication products; commercial loans for financing for working capital, organic growth, and acquisitions; real estate term and construction loans; mortgage warehouse lending services; treasury management, trust, and advisory and escrow services; and letters of credit. The company operates in Austin, Dallas, Fort Worth, Houston, and San Antonio metropolitan areas of Texas. Texas Capital Bancshares, Inc. was incorporated in 1996 and is headquartered in Dallas, Texas.
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