UMB Financial Corporation UMBF appears to be a promising bet now given its solid organic growth and robust fundamentals. Also, its earnings growth prospects are impressive. In addition, higher interest rates and improving economy are anticipated to stabilize its top line.
Further, it has been successful in gaining analysts’ confidence. Its current-year earnings estimates have been revised 1.5% upward over the past 60 days. As a result, the stock carries a Zacks Rank #2 (Buy).
Shares of UMB Financial have gained 3.9% over the past six months compared with industry’s growth of 7.6%.
What Makes the Stock Attractive
Revenue Strength: UMB Financial has an impressive revenue growth story. Its top line witnessed a CAGR of 7.1% over the last five years (2014-2018) on the back of rising interest income and fee income growth. Also, its projected sales growth rate of 7.9% for 2019 and 3.5% for 2020 ensures the continuation of the uptrend in revenues.
Earnings Per Share (EPS) Growth: UMB Financial witnessed earnings growth of 12.5% in the last three to five years. This earnings momentum is likely to continue in the near term as reflected by the company’s projected EPS growth rate of 18.6% for 2019 and 2.5% for 2020.
Further, the company’s long-term (three to five years) estimated EPS growth rate of 7.6% promises rewards for investors.
Impressive Balance Sheet Growth: UMB Financial’s loans and deposits have witnessed a CAGR of 14.7% and 9.1%, respectively, over a five-year period (ended 2018). Also, both loan and deposit balances are likely to get support from an improving economy.
Strong Leverage: UMB Financial’s debt/equity ratio is 0.03 compared with the industry average of 0.37. The relatively strong financial health of the company will help it perform better than its peers in a dynamic business environment.
Steady Capital Deployment Activities: In October 2018, the board of directors hiked quarterly dividend by 3.4%. Also, in April 2019, the company announced a share repurchase authorization of up to 2 million shares. Moreover, its debt/equity ratio and dividend payout ratio compare favorably with that of the broader industry, reflecting the fact that such dividend hikes are sustainable.
Superior Return on Equity (ROE): UMB Financial’s ROE of 8.9% compared with the industry average of 10.7% underlines the company’s commendable position over its peers.
Valuation Looks Reasonable: UMB Financial looks undervalued, with respect to its price-to-sales (P/S) ratio. The company has a P/S ratio of 2.63 compared with the industry average of 2.95. Also, the bank’s PEG ratio of 1.6 is below the industry average of 1.7.
Additionally, the company has a Value Score of B. The Value Score condenses all valuation metrics into one actionable score that helps investors steer clear of ‘value traps’ and to identify stocks that are truly trading at a discount. Our research shows that stocks with Style Scores of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
Favorable VGM Score: UMB Financial has a VGM Score of A. Our research shows stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 or 2, offer the best upside potential.
Other Stocks to Consider
First Business Financial Services FBIZ has witnessed 10.7% upward estimate revision over the past 60 days. The company’s shares have risen nearly 21% in the past six months. It has a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Mackinac Financial Corporation’s MFNC shares have rallied 20.9% in six months’ time. Further, the company’s earnings estimates for the ongoing year have moved 2.3% north in the past 60 days. The stock currently carries a Zacks Rank of 2.
The Zacks Consensus Estimate for the current year for Wintrust Financial Corporation WTFC, carrying a Zacks Rank #2, has been revised slightly upward in the past 60 days. The company’s share price has jumped 12.8% in the past six months.
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UMB Financial Corporation (UMBF) : Free Stock Analysis Report
Wintrust Financial Corporation (WTFC) : Free Stock Analysis Report
First Business Financial Services, Inc. (FBIZ) : Free Stock Analysis Report
Mackinac Financial Corporation (MFNC) : Free Stock Analysis Report
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