First Financial Bankshares, Inc. (Texas) – Value Analysis (NASDAQ:FFIN) : December 13, 2017

Capitalcube gives First Financial Bankshares, Inc. (Texas) a score of 57.

Our analysis is based on comparing First Financial Bankshares, Inc. (Texas) with the following peers – Southside Bancshares, Inc., Bank of the Ozarks, Prosperity Bancshares, Inc.(R), Texas Capital Bancshares, Inc., International Bancshares Corporation, Cullen/Frost Bankers, Inc., LegacyTexas Financial Group, Inc. and Independent Bank Group, Inc. (SBSI-US, OZRK-US, PB-US, TCBI-US, IBOC-US, CFR-US, LTXB-US and IBTX-US).

Fundamental Overview

First Financial Bankshares, Inc. (Texas) has a fundamental score of 57 and has a relative valuation of OVERVALUED.

Fundamental Score

Company Overview

  • It currently trades at a Price/Book ratio of (3.35).
  • The market expects FFIN-US to grow faster than its peers and for the company to improve its current ROE.
  • FFIN-US‘s relative capital efficiency and net profit margins are both around the median level.
  • Changes in annual revenues are in line with its chosen peers but lags in terms of earnings suggesting that the company is less cost conscious and may be spending for growth.
  • Over the last five years, FFIN-US‘s return on equity has declined from above median to around median among its peers, indicating declining relative operating performance.
  • While FFIN-US‘s revenues growth has been around the peer median in recent years, the market seems to see faster growth ahead and gives its shares a higher than peer median P/E ratio.
  • The company’s level of equity capital investment is relatively low and suggests it is milking the business.

Drivers of Margin

  • Margins do not suggest any relative benefit from a pricing or an operating cost advantage.
  • The company’s net interest income (net interest income/total revenues) of 71.91% is around peer median suggesting that FFIN-US‘s lending operations does not benefit from any differentiating pricing advantage. In addition, FFIN-US‘s pre-tax margin of 44.51% is also around the peer median suggesting no operating cost advantage relative to peers.
  • The company’s comparatively healthy proportion of fee based income (i.e. non interest income/total revenues) of 28.09% versus peer median of 16.15% — suggests that FFIN-US‘s operating margins are likely to be less volatile. In addition, FFIN-US‘s proportion of overhead costs (i.e. non interest expense/total revenues) of 53.12x is around peer median — suggesting no cost advantage on fee-based overhead operations.
Drivers of Margins

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Differentiated; High Cost, Commodity; High Cost, Commodity; Low Cost

Company Profile

First Financial Bankshares, Inc. (Texas) is a bank holding company, which engages in the provision of financial and community banking services. It offers mortgage loans, savings and checking accounts, auto and equity loans, online and mobile banking, investment and trust management, and retirement plans. The company was founded in 1956 and is headquartered in Abilene, TX.