UMB Financial Corporation has positioned itself for exponential growth, propelled by a robust loan and deposit balance along with the promise of higher interest rates and a commendable liquidity profile. Therefore, considering the addition of this stock to your portfolio at this juncture would be nothing short of a stroke of brilliance.
The Zacks Consensus Estimate for UMB Financial’s 2024 and 2025 earnings has surged upward by 3.7% and 3.1% respectively over the last 30 days, exemplifying the bullish sentiment of analysts towards its earnings growth potential. As of now, UMBF carries a Zacks Rank #2 (Buy).
Over the last six months, the company’s shares have outperformed, showing a commendable gain of 24.2% compared with the industry’s growth of 13%
Image Source: Zacks Investment Research
Now, let’s delve into the pivotal factors that validate UMBF stock as a compelling investment choice.
Driving Forces Behind UMB Financial’s Prosperity
Revenue Strength: UMB Financial has exhibited a consistent uptrend in its revenue generation. The company’s revenues demonstrated a compound annual growth rate (CAGR) of 6.8% over the last five years (2018-2023). Moreover, the company’s loans and deposits registered a CAGR of 13% and 9.8% respectively in the last three years (2019-2023). This robust loan and deposit balance are anticipated to serve as a cornerstone for its financial strength.
The company’s net interest income (NII) experienced a CAGR of 8.2% over the last four years (ended 2023). With the Federal Reserve signaling a continued period of high rates in the upcoming quarters and the existence of a healthy loan demand, NII is poised for enduring support. UMBF has strategically diversified revenue streams to include non-interest sources, reflecting a CAGR of 6.2% in the past four years (ended 2023). This deliberate move to lessen exposure to spread income is expected to fuel top-line growth.
Revenues are forecasted to soar by 1.7% and 5.1% in 2024 and 2025 respectively.
Earnings Growth: UMB Financial’s earnings have observed an upward trajectory of 20.9% over the past three to five years. While the company’s earnings are anticipated to dip by 8.9% in 2024, a resurgence looms on the horizon with a projected growth of 3.7% in 2025.
Solid Balance Sheet: The company’s debt/equity ratio of 0.12 is significantly lower than the industry average of 0.28, reflective of UMBF’s robust liquidity standing.
Furthermore, as of Dec 31, 2023, UMB Financial’s debt stood at $2.18 billion, juxtaposed with a cash and dues from the bank and interest-bearing deposits with banks totaling $5.61 billion. The company holds a commendable liquidity position, and it’s all set to honor its debt obligations even amid the ongoing economic uncertainties.
Capital Redistribution: UMBF boasts an enticing capital distribution model. Since 2002, the company has consistently upped its dividends annually, with the most recent hike being a notable 2.6% announced in October 2023.
Adding to this, UMB Financial has also set in motion a share repurchase plan. During the third quarter of 2023, it greenlit the repurchase of up to one million shares of its common stock. Given the company’s robust liquidity and a favorable debt/equity ratio and payout rate compared with the industry, its capital distribution endeavors appear to be on a sustainable growth trajectory.
Alternative Options to Explore
Additionally, if you are on the lookout for other potential investment prospects in the finance space, it might be worth looking into First Busey Corp. (BUSE) and Park National Corp. (PRK), both of which currently sport a Zacks Rank #1 (Strong Buy).Check out the full list of today’s Zacks #1 Rank stocks for more insights
BUSE’s 2024 earnings estimates have surged by 5.4% over the past 30 days, with First Busey’s shares making an impressive gain of 13.6% over the last six months.
Meanwhile, PRK’s 2024 earnings estimates have escalated by 4.9% over the past 30 days, while Park National’s shares have soared by a remarkable 25.8% in the past six months.
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Interested in a free stock analysis report for UMB Financial Corporation (UMBF) : Click here
Delve into a free stock analysis report for Park National Corporation (PRK) : Click here
Uncover a free stock analysis report for First Busey Corporation (BUSE) : Click here
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