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4 Reasons to Add UMB Financial (UMBF) Stock to Your Portfolio
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UMB Financial Corporation’s (UMBF - Free Report) strong loan pipeline and growing deposits are likely to offer support to the company’s financials. Also, efforts to diversify operations to non-interest sources of revenues will aid top-line growth. Hence, it seems to be a wise idea to add the UMBF stock to your portfolio now, given its solid fundamentals and decent growth prospects.
The Zacks Consensus Estimate for UMBF's earnings has been revised 3.2% north for 2023 over the past month. This shows that analysts are optimistic regarding the company’s earnings prospects. It currently carries a Zacks Rank #2 (Buy).
In the past six months, shares of the company have gained 16.8%, outperforming the industry's rise of 8.5%.
Image Source: Zacks Investment Research
Mentioned below are a few factors that make UMBF a must-buy stock now.
Balance Sheet Strength: UMB Financial has a healthy balance sheet position. The company witnessed impressive net loan growth in the last three years (2020-2022), with a compound annual growth rate (CAGR) of 15.8%. Also, deposits saw a CAGR of 9.8% during the same time period. The rising trend for loans and deposits continued in the first nine months of 2023. Management continues to see opportunities for loan growth in various verticals across its footprint in fourth-quarter 2023 and expects continued outperformance relative to the industry.
Robust Revenues: UMB Financial benefits from higher interest rates. The company’s NII witnessed a CAGR of 10.8% over the last four years (ended 2022). The rising trend for NII continued in the first nine months of 2023. As the Federal Reserve Board is expected to keep rates high in the near term, the metric is likely to witness moderate growth.
Fee income strength is a positive for the bank’s top-line growth. UMB Financial has been focusing on diversifying operations to non-interest sources of revenues in order to reduce exposure to spread income. In fact, the company's investment in revenue-producing capabilities is likely to support growth. Going forward, diverse lines of business and verticals will keep aiding UMB Financial’s non-interest income.
Strong Liquidity Position: As of Sep 30, 2023, UMB Financial had debt (comprising short-term and long-term debt) of $2.68 billion, while cash and due from banks as well as interest-bearing due from banks were $4.01 billion. The company, therefore, seems to be well-placed in terms of its liquidity profile and is expected to continue meeting its debt obligations even if the economic situation worsens.
Sustainable Capital Deployment Activities: We remain encouraged by UMB Financial’s enhanced capital distribution activities. It has been raising dividends annually on a regular basis since 2002, with the latest hike of 2.6% announced in October 2023. Also, the bank has a share repurchase plan in place. During third-quarter 2023, it approved the repurchase of up to 1 million shares of its common stock. These can take place at any point of time until its termination on Apr 30, 2024. The company's capital-distribution activities look sustainable, given its favorable debt/equity ratio and payout rate compared with the broader industry.
Other Stocks Worth a Look
A couple of other top-ranked stocks from the banking space are First Citizens BancShares, Inc. (FCNCA - Free Report) and Wells Fargo & Company (WFC - Free Report) .
The Zacks Consensus Estimate for First Citizens BancShares' current-year earnings has been revised 3.7% upward over the last 30 days. The stock has risen 11.2% over the past six months. Currently, FCNCA carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Wells Fargo carries a Zacks Rank #2 at present. The consensus mark for WFC’s 2023 earnings has been revised 5.4% upward over the last 30 days. In the past six months, shares of WFC have gained 5.2%.
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4 Reasons to Add UMB Financial (UMBF) Stock to Your Portfolio
UMB Financial Corporation’s (UMBF - Free Report) strong loan pipeline and growing deposits are likely to offer support to the company’s financials. Also, efforts to diversify operations to non-interest sources of revenues will aid top-line growth. Hence, it seems to be a wise idea to add the UMBF stock to your portfolio now, given its solid fundamentals and decent growth prospects.
The Zacks Consensus Estimate for UMBF's earnings has been revised 3.2% north for 2023 over the past month. This shows that analysts are optimistic regarding the company’s earnings prospects. It currently carries a Zacks Rank #2 (Buy).
In the past six months, shares of the company have gained 16.8%, outperforming the industry's rise of 8.5%.
Image Source: Zacks Investment Research
Mentioned below are a few factors that make UMBF a must-buy stock now.
Balance Sheet Strength: UMB Financial has a healthy balance sheet position. The company witnessed impressive net loan growth in the last three years (2020-2022), with a compound annual growth rate (CAGR) of 15.8%. Also, deposits saw a CAGR of 9.8% during the same time period. The rising trend for loans and deposits continued in the first nine months of 2023. Management continues to see opportunities for loan growth in various verticals across its footprint in fourth-quarter 2023 and expects continued outperformance relative to the industry.
Robust Revenues: UMB Financial benefits from higher interest rates. The company’s NII witnessed a CAGR of 10.8% over the last four years (ended 2022). The rising trend for NII continued in the first nine months of 2023. As the Federal Reserve Board is expected to keep rates high in the near term, the metric is likely to witness moderate growth.
Fee income strength is a positive for the bank’s top-line growth. UMB Financial has been focusing on diversifying operations to non-interest sources of revenues in order to reduce exposure to spread income. In fact, the company's investment in revenue-producing capabilities is likely to support growth. Going forward, diverse lines of business and verticals will keep aiding UMB Financial’s non-interest income.
Strong Liquidity Position: As of Sep 30, 2023, UMB Financial had debt (comprising short-term and long-term debt) of $2.68 billion, while cash and due from banks as well as interest-bearing due from banks were $4.01 billion. The company, therefore, seems to be well-placed in terms of its liquidity profile and is expected to continue meeting its debt obligations even if the economic situation worsens.
Sustainable Capital Deployment Activities: We remain encouraged by UMB Financial’s enhanced capital distribution activities. It has been raising dividends annually on a regular basis since 2002, with the latest hike of 2.6% announced in October 2023. Also, the bank has a share repurchase plan in place. During third-quarter 2023, it approved the repurchase of up to 1 million shares of its common stock. These can take place at any point of time until its termination on Apr 30, 2024. The company's capital-distribution activities look sustainable, given its favorable debt/equity ratio and payout rate compared with the broader industry.
Other Stocks Worth a Look
A couple of other top-ranked stocks from the banking space are First Citizens BancShares, Inc. (FCNCA - Free Report) and Wells Fargo & Company (WFC - Free Report) .
The Zacks Consensus Estimate for First Citizens BancShares' current-year earnings has been revised 3.7% upward over the last 30 days. The stock has risen 11.2% over the past six months. Currently, FCNCA carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Wells Fargo carries a Zacks Rank #2 at present. The consensus mark for WFC’s 2023 earnings has been revised 5.4% upward over the last 30 days. In the past six months, shares of WFC have gained 5.2%.