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4 Reasons to Bet on UMB Financial (UMBF) Stock

Zacks Equity Research

Banking stocks have been witnessing a bullish trend since the U.S presidential election results. Banks primarily expect fewer regulations under the Donald Trump administration. This along with an improved economic scenario and a better interest rate environment painted a positive outlook for the sector. Also, the chances of a rate hike in March are quite high.

If you are thinking of taking position in bank stocks, then this is probably the appropriate time. While you may do your own research to find bank stocks that are well positioned to gain in the near term, we present a stock from this space that boasts favorable attributes to gain. We are talking about UMB Financial Corporation UMBF.

The stock has gained 30.5% over the past six months, outpacing the 26% gain for the Zacks categorized Banks - Midwest industry.

Looking at the estimate revisions trend, UMB Financials’ estimates for the current year have been revised 2.8% upward over the past 60 days, indicating optimism about its growth prospects. As a result, this stock carries a Zacks Rank #2 (Buy).  

Here are the factors that might help it continue the rally:  

Earnings per Share Growth: UMB Financial has witnessed EPS growth of 13.5% over the past 3-5 years compared with 8.8% for the industry. Moreover, this earnings momentum is likely to continue in the near term as reflected by the company’s projected EPS growth rate of 7.2% for 2017.

Also, the company’s long-term (3-5 years) estimated EPS growth rate of 11% promises rewards for investors in the long run.

Revenue Strength: The company’s projected sales growth for the current year of 7.5% compares with 4.1% for the industry.

Strong Leverage: The debt/equity ratio of the company is 0.04, compared with the industry average of 0.47, indicating a relatively lower debt burden. It also indicates that the company’s financial stability of the company even in adverse economic conditions.

Growing Cash Flow: Though the company’s historical cash flow growth was sluggish at 6.7% compared with 12% for the industry, the current cash flow growth looks much better. The company’s current cash flow growth rate is 21.8% compared with 14.5% for the industry.

Other Stocks to Consider

Other stocks worth considering in the same industry are Independent Bank Corporation IBCP, PrivateBancorp, Inc. PVTB and MainSource Financial Group, Inc. MSFG. All these stocks sport a Zacks Rank#1 (Strong Buy).

Independent Bank Corporation witnessed an upward earnings estimate revision of 4.4% over the past 60 days. Also, its share price is up 45.5% year to date. You can see the complete list of today’s Zacks #1 Rank stocks here.

PrivateBancorp, Inc. earnings estimates moved north by 5.4% over the past 60 days and its share price is up 53.7% year to date.

MainSource Financial Group, Inc. witnessed an upward earnings estimate revision of 6.7%. Moreover, its share price is up 62.2% year to date.

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