From the vast universe of banking stocks, today we pick UMB Financial Corporation (NASDAQ:UMBF) for you. The company offers a profitable investment opportunity based on organic growth, steady capital-deployment activities and robust fundamentals.
The company has been witnessing upward estimate revisions, reflecting analysts’ optimism about its earnings growth potential. Over the past 60 days, the Zacks Consensus Estimate for 2020 and 2021 has displayed an upward trend.
However, this Zacks Rank #2 (Buy) stock has depreciated around 11.4%, in the last six months, compared with the industry’s decline of 12.8%.
Why is UMB Financial a Golden Egg?
Earnings Strength: UMB Financial recorded an earnings growth rate of 14.6% over the last three to five years. Retaining this momentum, the long-term earnings growth rate is anticipated to be 4.51%. Good news is that the company generated an average positive earnings surprise of 8.49%, over the trailing four quarters.
Revenue Strength: UMB Financial’s increasing net interest margin has favorably impacted net interest income (NII), which witnessed a compound annual growth rate (CAGR) of 13% over the last five years (ended 2019). For the five-year period ended 2019, fee income also witnessed a CAGR of 3.6%, with some annual volatility. Also, its projected sales growth rate of 3.2% for 2020 and 3.6% for 2021 ensures the continuation of the uptrend in revenues.
The company’s projected sales growth (F1/F0) of 3.2% indicates constant upward momentum in revenues.
Steady Capital Deployment Activities: The company has been raising dividends on a regular basis. The last hike of 3.3% was announced in October 2019. Also, the bank has a share-repurchase plan in place. In April 2019, the company announced a share-repurchase authorization of up to 2 million shares.
Strong Leverage: UMB Financial’s debt/equity ratio is 0.04 compared with the industry average of 0.4. The relatively stronger financial health of the company will help it perform better than its peers in a dynamic business environment.
Other Stocks to Consider
Farmers National Banc Corp. (NASDAQ:FMNB) has been witnessing upward estimate revisions for the past 60 days. Moreover, this Zacks #1 Ranked stock has rallied 6% in the last six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
MidWestOne Financial Group, Inc. (NASDAQ:MOFG) has been witnessing upward estimate revisions for the past 60 days. Further, the company’s shares have lost around 5% in six months’ time. At present, it carries a Zacks Rank of 2.
First Business Financial Services, Inc. (NASDAQ:FBIZ) has been witnessing upward estimate revisions for the past 60 days. Additionally, the stock has declined 2.7% in the last six months. It currently holds a Zacks Rank #2.
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