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Cullen/Frost Soars Nearly 13% in 6 Months: Is It Worth Buying Now?
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Key Takeaways
Cullen/Frost posted 12.8% stock gains in six months, beating the industry and topping First Horizon.
CFR expects 3-5% NII growth in 2026, supported by loan growth and higher earning assets.
Cullen/Frost plans 12-15 new branches in 2026 to expand across fast-growing Texas markets.
Shares of Cullen/Frost Bankers, Inc. (CFR - Free Report) have gained 12.8% in the past six months, outperforming the industry’s growth of 1.7%. During the same period, the S&P 500 Index has rallied 9.6%.
Compared with its peers, BOK Financial Corporation (BOKF - Free Report) and First Horizon Corporation (FHN - Free Report) , CFR stock underperformed BOK Financial but outpaced First Horizon. Shares of BOKF and FHN have gained 17.6% and 9.2%, respectively, during the past six months.
Price Performance
Image Source: Zacks Investment Research
Does the CFR stock have more upside left despite its recent price rally? Let us find out by taking a closer look at its fundamentals and growth prospects.
Factors Likely to Drive CFR Stock
Diversified Revenue Base Supports Growth: The company has been generating steady revenue growth through a balanced mix of interest and fee-based businesses. Its total revenues recorded a compound annual growth rate (CAGR) of 9.9% during 2020-2025, reflecting solid business momentum across operating segments. Net interest income (NII) remained the primary growth driver, registering a 12.2% CAGR during the same period, supported by healthy loan growth and higher earning assets. It continued to dominate revenues, accounting for nearly 75.1% in the first quarter of 2026, while both revenues and NII improved year over year. Though the Federal Reserve kept rates unchanged at the April 2026 Federal Open Market Committee meeting amid inflation and geopolitical uncertainty, expectations of a potential rate cut later this year are likely to support NII growth. Management expects NII to rise 3–5% year over year in 2026.
Non-interest income continues to provide additional revenue stability. The metric expanded at a CAGR of 1.4% during 2020-2025, with growth trends remaining favorable in the first quarter of 2026. Management projects non-interest income to increase 4-5% in 2026, driven by continued strength in trust and investment management fees, insurance commissions and deposit service charges. A diversified revenue structure is expected to continue supporting the company’s long-term profitability and growth.
The Zacks Consensus Estimate for CFR’s 2026 and 2027 revenues is pegged at $2.4 billion and $2.5 billion, respectively, which indicate year-over-year growth rates of 3.9% and 4.6%.
Revenue Estimates
Image Source: Zacks Investment Research
Broader Texas Presence to Drive Organic Growth: Cullen/Frost has been steadily expanding its branch network across Texas to deepen customer relationships and capture growth opportunities in some of the state’s fastest-growing markets. As part of this strategy, the company strengthened its presence in Houston through a 25-branch expansion and simultaneously launched a 28-branch buildout in Dallas in 2021. The expansion momentum continued in late 2025 with the opening of three new financial centers, including two in Austin and one in Dallas. Further, management remains focused on increasing its footprint in Austin and plans to significantly expand the region’s financial center network by 2026.
The company’s expansion efforts have contributed to steady balance-sheet growth over the years. Supported by a broader branch footprint, deposits witnessed a CAGR of 4.2% during 2020-2025, while loans, net of unearned discounts, recorded a CAGR of 4.6%. The growth trends remained favorable in the first quarter of 2026 as both loans and deposits increased. With plans to open an additional 12-15 branches in 2026, along with a solid loan pipeline and an improving lending environment, the company remains well-positioned to drive long-term organic growth across the attractive Texas market.
Consistent Capital Distribution Activities: CFR continues to maintain a disciplined capital distribution strategy. In April 2026, the company increased its quarterly dividend by 3% to $1.03 per share, reflecting its commitment to consistent shareholder returns. The company has increased its dividend six times over the past five years, with a payout ratio of 39% and a current dividend yield of 2.87%.
Dividend Yield
Image Source: Zacks Investment Research
Likewise, BOK Financial increased its quarterly dividend by 10.6% to 63 cents per share in October 2025, whereas First Horizon announced a 13.3% increase in its quarterly dividend to 17 cents per share in January 2026.
In addition to dividends, the company remains active on the share repurchase front. In January 2026, the board authorized a $300 million stock repurchase program, effective through Jan. 27, 2027. As of March 31, 2026, nearly $230 million remained available under the program. Given its solid earnings strength and favorable debt-to-equity ratio relative to the industry, CFR’s capital distribution activities appear sustainable over the long term.
Near-Term Hurdles for CFR
Elevated Expense Base: Cullen/Frost’s expense base has remained elevated over the past few years. Its non-interest expenses witnessed a CAGR of 10.9% during 2020-2025, and the trend continued in the first quarter of 2026. The rise was largely driven by higher salaries and employee benefits, along with increased spending on technology, furniture and equipment, and other operating expenses.
Expense Trend
Image Source: Zacks Investment Research
Expense levels are expected to stay high as the company continues investing in technology initiatives and expanding its financial-center footprint. Further, management projects non-interest expense growth of 5-6% for full-year 2026, limiting near-term operating leverage.
Concentrated Commercial Loan Portfolio: Cullen/Frost’s loan portfolio remains heavily concentrated in commercial lending, including commercial and industrial as well as commercial real estate loans. As of March 31, 2026, commercial loans accounted for nearly 75.3% of the total loan portfolio. Given the uncertain macroeconomic environment, weakness in commercial lending activity or any economic downturn could pressure asset quality and hurt the company’s financial performance.
Analyzing CFR’s Earnings Estimates & Valuation
The Zacks Consensus Estimate for CFR’s 2026 and 2027 earnings indicates a 4.8% and 3.8% rise, respectively. Over the past month, the earnings estimates for 2026 and 2027 have been revised upward.
Estimates Revision Trend
Image Source: Zacks Investment Research
In terms of valuation, CFR stock appears expensive relative to the industry. The company is currently trading at a 12-month trailing price-to-earnings (P/E) of 13.2X, which is higher than the industry’s 12.2X.
Price-to-Earnings F12 M
Image Source: Zacks Investment Research
Notably, BOK Financial holds a forward 12-month P/E ratio of 12.6, while First Horizon’s P/E ratio stands at 10.9.
How to Approach CFR Stock Now?
While elevated expenses, concentrated commercial loan exposure and a premium valuation remain near-term concerns, these risks appear manageable given Cullen/Frost’s strong balance sheet and stable earnings profile. The company’s diversified revenue base and favorable earnings estimate revisions further support its financial strength despite an uncertain macroeconomic backdrop.
Further, ongoing branch expansion across Texas and disciplined capital distribution activities support the company’s long-term growth. Management’s focus on strengthening customer relationships and enhancing shareholder returns adds to its growth visibility.
Overall, CFR appears to be a compelling option for investors seeking exposure to a fundamentally strong regional bank with stable profitability, steady organic growth prospects and shareholder-friendly policies.
View the Zacks #1 Rank List
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Cullen/Frost Soars Nearly 13% in 6 Months: Is It Worth Buying Now?
Key Takeaways
Shares of Cullen/Frost Bankers, Inc. (CFR - Free Report) have gained 12.8% in the past six months, outperforming the industry’s growth of 1.7%. During the same period, the S&P 500 Index has rallied 9.6%.
Compared with its peers, BOK Financial Corporation (BOKF - Free Report) and First Horizon Corporation (FHN - Free Report) , CFR stock underperformed BOK Financial but outpaced First Horizon. Shares of BOKF and FHN have gained 17.6% and 9.2%, respectively, during the past six months.
Price Performance
Image Source: Zacks Investment Research
Does the CFR stock have more upside left despite its recent price rally? Let us find out by taking a closer look at its fundamentals and growth prospects.
Factors Likely to Drive CFR Stock
Diversified Revenue Base Supports Growth: The company has been generating steady revenue growth through a balanced mix of interest and fee-based businesses. Its total revenues recorded a compound annual growth rate (CAGR) of 9.9% during 2020-2025, reflecting solid business momentum across operating segments. Net interest income (NII) remained the primary growth driver, registering a 12.2% CAGR during the same period, supported by healthy loan growth and higher earning assets. It continued to dominate revenues, accounting for nearly 75.1% in the first quarter of 2026, while both revenues and NII improved year over year. Though the Federal Reserve kept rates unchanged at the April 2026 Federal Open Market Committee meeting amid inflation and geopolitical uncertainty, expectations of a potential rate cut later this year are likely to support NII growth. Management expects NII to rise 3–5% year over year in 2026.
Non-interest income continues to provide additional revenue stability. The metric expanded at a CAGR of 1.4% during 2020-2025, with growth trends remaining favorable in the first quarter of 2026. Management projects non-interest income to increase 4-5% in 2026, driven by continued strength in trust and investment management fees, insurance commissions and deposit service charges. A diversified revenue structure is expected to continue supporting the company’s long-term profitability and growth.
The Zacks Consensus Estimate for CFR’s 2026 and 2027 revenues is pegged at $2.4 billion and $2.5 billion, respectively, which indicate year-over-year growth rates of 3.9% and 4.6%.
Revenue Estimates
Image Source: Zacks Investment Research
Broader Texas Presence to Drive Organic Growth: Cullen/Frost has been steadily expanding its branch network across Texas to deepen customer relationships and capture growth opportunities in some of the state’s fastest-growing markets. As part of this strategy, the company strengthened its presence in Houston through a 25-branch expansion and simultaneously launched a 28-branch buildout in Dallas in 2021. The expansion momentum continued in late 2025 with the opening of three new financial centers, including two in Austin and one in Dallas. Further, management remains focused on increasing its footprint in Austin and plans to significantly expand the region’s financial center network by 2026.
The company’s expansion efforts have contributed to steady balance-sheet growth over the years. Supported by a broader branch footprint, deposits witnessed a CAGR of 4.2% during 2020-2025, while loans, net of unearned discounts, recorded a CAGR of 4.6%. The growth trends remained favorable in the first quarter of 2026 as both loans and deposits increased. With plans to open an additional 12-15 branches in 2026, along with a solid loan pipeline and an improving lending environment, the company remains well-positioned to drive long-term organic growth across the attractive Texas market.
Consistent Capital Distribution Activities: CFR continues to maintain a disciplined capital distribution strategy. In April 2026, the company increased its quarterly dividend by 3% to $1.03 per share, reflecting its commitment to consistent shareholder returns. The company has increased its dividend six times over the past five years, with a payout ratio of 39% and a current dividend yield of 2.87%.
Dividend Yield
Image Source: Zacks Investment Research
Likewise, BOK Financial increased its quarterly dividend by 10.6% to 63 cents per share in October 2025, whereas First Horizon announced a 13.3% increase in its quarterly dividend to 17 cents per share in January 2026.
In addition to dividends, the company remains active on the share repurchase front. In January 2026, the board authorized a $300 million stock repurchase program, effective through Jan. 27, 2027. As of March 31, 2026, nearly $230 million remained available under the program. Given its solid earnings strength and favorable debt-to-equity ratio relative to the industry, CFR’s capital distribution activities appear sustainable over the long term.
Near-Term Hurdles for CFR
Elevated Expense Base: Cullen/Frost’s expense base has remained elevated over the past few years. Its non-interest expenses witnessed a CAGR of 10.9% during 2020-2025, and the trend continued in the first quarter of 2026. The rise was largely driven by higher salaries and employee benefits, along with increased spending on technology, furniture and equipment, and other operating expenses.
Expense Trend
Image Source: Zacks Investment Research
Expense levels are expected to stay high as the company continues investing in technology initiatives and expanding its financial-center footprint. Further, management projects non-interest expense growth of 5-6% for full-year 2026, limiting near-term operating leverage.
Concentrated Commercial Loan Portfolio: Cullen/Frost’s loan portfolio remains heavily concentrated in commercial lending, including commercial and industrial as well as commercial real estate loans. As of March 31, 2026, commercial loans accounted for nearly 75.3% of the total loan portfolio. Given the uncertain macroeconomic environment, weakness in commercial lending activity or any economic downturn could pressure asset quality and hurt the company’s financial performance.
Analyzing CFR’s Earnings Estimates & Valuation
The Zacks Consensus Estimate for CFR’s 2026 and 2027 earnings indicates a 4.8% and 3.8% rise, respectively. Over the past month, the earnings estimates for 2026 and 2027 have been revised upward.
Estimates Revision Trend
Image Source: Zacks Investment Research
In terms of valuation, CFR stock appears expensive relative to the industry. The company is currently trading at a 12-month trailing price-to-earnings (P/E) of 13.2X, which is higher than the industry’s 12.2X.
Price-to-Earnings F12 M
Image Source: Zacks Investment Research
Notably, BOK Financial holds a forward 12-month P/E ratio of 12.6, while First Horizon’s P/E ratio stands at 10.9.
How to Approach CFR Stock Now?
While elevated expenses, concentrated commercial loan exposure and a premium valuation remain near-term concerns, these risks appear manageable given Cullen/Frost’s strong balance sheet and stable earnings profile. The company’s diversified revenue base and favorable earnings estimate revisions further support its financial strength despite an uncertain macroeconomic backdrop.
Further, ongoing branch expansion across Texas and disciplined capital distribution activities support the company’s long-term growth. Management’s focus on strengthening customer relationships and enhancing shareholder returns adds to its growth visibility.
Overall, CFR appears to be a compelling option for investors seeking exposure to a fundamentally strong regional bank with stable profitability, steady organic growth prospects and shareholder-friendly policies.
CFR currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.