Stellar Bancorp (STEL) opened 2026 with Q1 revenue of US$108.5 million and basic EPS of US$0.53, supported by trailing 12 month revenue of US$420.7 million and EPS of US$2.06. Over recent quarters, revenue has ranged between US$101.1 million and US$108.5 million, while basic EPS has moved between roughly US$0.46 and US$0.53. This gives investors a consistent read on earnings power as they weigh the latest update against prior periods. With a trailing net profit margin of 25% compared with 26.4% a year earlier, the focus now is on whether the current level of profitability can sustain the company’s modest forecast growth profile.

See our full analysis for Stellar Bancorp.

With the headline numbers in place, the next step is to see how this earnings print lines up against the prevailing narratives around growth, margins, and execution risk.

Loan book holding around US$7.3b while credit quality fluctuates

• Total loans have sat in roughly the US$7.2b to US$7.4b range over recent quarters, with non performing loans moving between US$37.2 million and US$54.5 million across the same period.
• Bears argue that competition and payoff activity could cap loan growth, and this range bound loan book together with non performing loans that have moved around US$40 million to more than US$50 million gives some backing to that concern, although:
  • The presence of non performing loans at these levels is consistent with a bank that is still generating trailing 12 month net income of about US$105.1 million.
  • The mix of commercial and real estate lending in Houston and Dallas that bears worry about is not yet paired with any disclosed surge in non performing loans in the latest quarter.

Stay grounded on how today’s roughly US$7.3b loan book fits, or does not fit, with the cautious thesis on credit risk and growth, then weigh it against the fuller cautious case in the 🐻 Stellar Bancorp Bear Case.

Margins at 25% with revenue growth forecasts under 6%

• Trailing net profit margin is 25% versus 26.4% a year earlier, while analysts are looking for earnings growth of about 6.65% a year and revenue growth of about 5.3% a year, both below the broader US market growth rates cited.
• The consensus narrative expects margin resilience and ongoing revenue expansion, and this combination of a 25% margin with mid single digit forecast growth creates a mixed picture, because:
  • A 25% margin on trailing 12 month revenue of about US$420.7 million lines up with a business that is currently profitable and has produced roughly US$105.1 million of net income.
  • The fact that forecast growth rates are below the wider US market means any margin expansion that analysts factor in from 24.9% to 25.8% over the next few years carries extra weight for the consensus view.

P/E of 18x with share price above DCF fair value

• With the share price at US$37.32, the trailing P/E sits at 18x versus 11.8x for peers and 11.6x for the US Banks industry, and the price is above the DCF fair value of roughly US$31.48 and near the US$38.00 analyst consensus target.
• Bulls highlight the five year earnings growth rate of about 11.2% a year and modest forward growth expectations as reasons the current multiple can be supported, yet the valuation figures raise questions for that bullish stance, because:
  • A P/E premium to banking peers and a share price that already sits above the DCF fair value means investors are paying more than the modelled intrinsic value, even with trailing net income around US$105.1 million.
  • Analysts expecting revenue growth of about 5.7% a year and margins rising from 24.9% to 25.8% need those improvements to come through for an 18x P/E to look comfortable relative to banks on roughly 11x to 12x.

If the current 18x P/E and price above DCF fair value have you wondering how far the optimistic case really stretches, it is worth seeing how bullish investors connect these numbers to their upside story in the 🐂 Stellar Bancorp Bull Case.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Stellar Bancorp on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

With a mix of risks and rewards running through this story, it helps to move fast and stress test the numbers yourself against different outcomes using the 2 key rewards and 1 important warning sign.

See What Else Is Out There

Stellar Bancorp pairs a 25% margin with forecast growth below the wider US market and an 18x P/E premium to banking peers and DCF fair value.

If you are questioning whether paying a premium for modest growth makes sense right now, compare that valuation to 52 high quality undervalued stocks and see where the pricing looks more compelling.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.