Improving operating backdrop, rising rate environment and easing of regulations, along with the strengthening of the domestic economy, should keep supporting the performance of banking stocks. So, we bring one such stock — UMB Financial Corporation (UMBF - Free Report) — which continues to indicate strong fundamentals and improving prospects.
The company’s Zacks Consensus Estimate for the current-year earnings has been revised 1.9% upward over the last 30 days, reflecting analysts’ optimism regarding its earnings growth potential. As a result, the stock currently carries a Zacks Rank #2 (Buy).
Looking at the company’s price performance, the stock has gained 8.2% so far this year, slightly underperforming 9.6% growth recorded by the industry it belongs to. Notably, UMB Financial has a Momentum Score of B. Our research shows that stocks with a Style Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
Thus, given the strength in fundamentals and upward estimate revisions, the stock is expected to gain further in the near term.
Here are a few other factors that make the stock a viable investment option.
Revenue Strength: UMB Financial’s revenues have witnessed a CAGR of 5.5% over the last five years (2013-2017). Also, its projected sales growth of 6.5% for 2018 and 5.8% for 2019 ensure the continuation of the uptrend in revenues.
Earnings per Share (EPS) Growth: UMB Financial witnessed earnings growth of 6.2% 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 26.9% for 2018 and 5.5% for 2019.
Further, the company’s long-term (three to five years) estimated EPS growth rate of 10.4% promises rewards for investors.
Strong Leverage: UMB Financial’s debt/equity ratio is 0.04 compared with the industry average of 0.46. The relatively strong financial health of the company will help it perform better than its peers in a dynamic business environment.
Valuation Looks Reasonable: UMB Financial looks undervalued, with respect to its Price-to-Cash Flow (P/CF) and PEG ratios. The company has a P/CF ratio of 13.5 compared with the industry average of 15.2. Also, the bank’s PEG ratio of 1.6 is below the industry average of 1.7.
A few other stocks from the finance space worth considering are LPL Financial Holdings Inc. (LPLA - Free Report) , The Charles Schwab Corporation (SCHW - Free Report) and M&T Bank Corporation (MTB - Free Report) .
Over the last 60 days, LPL Financial witnessed an upward earnings estimate revision of 22.4% for the current year. Its share price has increased 58.7% in the past 12 months. The stock currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Schwab’s earnings estimates for the current year have been marginally revised upward over the past 60 days. Its shares have gained 23.8% in the past 12 months. It currently has a Zacks Rank #2.
Over the last 30 days, M&T Bank also witnessed a marginal upward earnings estimate revision for the current year. Its share price has increased 5.2% in the past 12 months. It also has a Zacks Rank of 2.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>