Explosive Gains for Triumph Bancorp as New Deals, New Analyst Excitement Kick In

Explosive Gains for Triumph Bancorp as New Deals, New Analyst Excitement Kick In

Triumph Bancorp (NASDAQ:TBK) may not be a familiar name, but those who have it in their portfolios currently are cheering after the company tacked on an extra 13.3% at one point. Though it's given back some of those gains with trading today so far, it's still made a nice upward cant, and for a while, hitting $100 per share looked like a very real possibility.

A Whole New Business Model Doesn't Hurt

The gains at Triumph came in large part thanks to new reports out from analyst firm B. Riley, as noted by its analyst Steve Moss. Moss upgraded Triumph from “neutral” to “buy” thanks in large part to one big move at Triumph: the acquisition of HubTran.

HubTran is a software provider, offering cloud-based automation software geared specifically toward the transportation industry and its back-office operations. Triumph Bancorp, meanwhile, is connecting HubTran's processes into TriumphPay, which is Triumph's payments platform. The combined effort will open up a range of new options for the transport industry, especially for servicing brokers and factor operations therein. With TriumphPay's addition, settlement operations and paying invoices will become a much simpler proposition, speeding up payments and improving cash flow in the transportation sector.

That in turn led Moss to note that such a move could represent several hundred million in extra revenue for Triumph Bancorp, and without having to plow a lot of cash behind the infrastructure required to generate said revenue. The resulting effort will not only represent bigger volumes for Triumph—the newly-augmented payment network should be processing around $33 billion in volume, say some reports—but also make TriumphPay a major new figure in interchange income.

Slowly Increasingly Bullish Sentiment

This is a big step forward for Triumph, but it's actually building on a trend that's been visible for the last year now. While ratings seem to have plateaued in recent weeks, the plateau featured a real climb to get there, as detailed by our latest research.

A year ago, the company had a comparatively mundane two “buy” and three “hold” ratings to its credit. Six months ago, bullish sentiment kicked in in a big way as the company added a “strong buy” recommendation to its two “buy” and three “hold” ratings. Back in January, the company added a “hold” rating, and the resulting ratio of one “strong buy”, two “buy” and four “hold” ratings has been in place ever since.

The average price target, meanwhile, has been trending upward nicely for the last year. Currently, the average is $62.86, with a high of $111 and a low of $26. That low, however, was held by DA Davidson and doesn't appear to have been modified since July of 2020, which suggests it may be stale. Given that the company's current share price is $92.31, the high looks a lot more likely than the low.

New Revenue Streams are (Usually) Always Welcome

It's hard to pass up a new revenue stream when the possibility is offered. After all, having more than one revenue stream allows you to better resist downturns in a particular market; it's why most investors don't put all their holdings into one stock but rather diversify among a broad range of issues. If some go down, others are more likely to go up and that helps moderate losses and open up the possibility for continuing gains.

Triumph Bancorp has already been demonstrating its ability to make gains; it was actually one of the best-performing bank stocks of 2020, and given the kind of year that 2020 was for stocks in general, that's no mean feat. Certainly, the mortgage boom of 2020—which is still echoing at least a bit today—helped, but Triumph's focus on the transportation industry proved to be a major help. The company managed to improve earnings in 2020 as compared to 2019, so it's clear that Triumph is a real powerhouse in the banking sector.

Since transportation will likely never go out of style until a major economic collapse prevents the flow of goods—and a collapse like that would probably take everybody with it—Triumph Bancorp represents a potentially very worthwhile target for its investors. Since Triumph Bancorp is also fairly well diversified in its own right—it's gained on both transport and mortgages so far—that improves its resilience and makes it a good target for anyone looking to protect against future potential downturn.

By not only surviving 2020, but also improving therein, Triumph Bancorp has put itself in an excellent position to withstand future potential difficulties. A recovery narrative in 2021 may be just what the company needs to put on some real steam and clear even the highest price target seen so far.

Companies in This Article:

CompanyCurrent PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Triumph Bancorp (TBK)$96.48+3.2%N/A49.99Buy$62.86