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5 Reasons to Snap Up UMB Financial (UMBF) Stock Presently

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It seems to be a wise idea to invest in UMB Financial Corporation UMBF stock right now. Besides other tailwinds, the company’s robust fundamentals and solid earnings growth prospects are supporting factors.

The company is well-poised for growth, driven by continued efforts to diversify non-interest income sources, as well as rising loans and deposits, which will support top-line growth in the quarters ahead.

In addition, analysts are bullish on the stock’s earnings growth prospects. Over the past 30 days, the Zacks Consensus Estimate for 2022 and 2023 earnings has moved northward by 13% and 8.5%, respectively. UMBF currently carries a Zacks Rank #2 (Buy).

In the past year, shares of UMB Financial have lost 9.3%, narrower than 16.5% decline of the industry it belongs to.

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Zacks Investment Research

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What Makes UMB Financial Investment Worthy

Earnings Growth: UMB Financial recorded earnings growth of 19.2% over the past three to five years. Further, the company’s earnings are projected to grow 12.4% and 5.1% for 2022 and 2023, respectively.

Moreover, UMB Financial has a decent earnings surprise history. The company's earnings have surpassed the Zacks Consensus Estimate in three of the trailing four quarters, missing the mark in one, with an average beat being 7.3%.

Strong Balance Sheet: UMB Financial has a healthy balance sheet position. The company’s net loan witnessed a compounded annual growth rate (“CAGR”) of 11% in the last five years (2017-2021). Deposits saw a CAGR of 28% in the last four years ended 2021. Although net loans witnessed a rising trend in first quarter, deposits saw a decline. Backed by a strong loans pipeline, economy recovery and resumption of business activities, demand for loans is expected to continue improving.

Fee-Income Strength: The company has been focused on diversifying operations to non-interest sources of revenues in order to reduce exposure to interest rates to balance the unprecedented risks related to the rate environment. For the five-year period that ended in 2021, fee income witnessed a CAGR of 5.2%. Although fee income witnessed a decline in 2021, the same saw a rise in first-quarter 2022. Such diversification will provide a natural hedge against lower-rate environments going forward.

Steady Capital Deployments: UMB Financial undertakes sustainable capital deployment activities.  The company has been raising dividends annually on a regular basis since 2002. The latest quarterly dividend hike of 15.6% was announced in July 2021. Also, the bank has a share-repurchase plan in place. In April 2022, the company approved a share-repurchase program of up to two million shares, valid upto April 2023. The company's capital-deployment activities look sustainable, given its favorable debt/equity ratio compared with the broader industry as well as its consistent earnings growth profile.

Superior Return on Equity (“ROE”): UMB Financial’s trailing 12-month ROE supports its growth potential. The company’s ROE of 12.16% compares favorably with ROE of 11.51% for the industry. This reflects that it is efficient in using shareholders’ funds compared with the overall market.

Other Stocks to Consider

Two other stocks from the banking space worth a look are Deutsche Bank DB and Cullen/Frost Bankers CFR. DB and CFR both sport a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Deutsche Bank’s current-year earnings has been revised upward by 7.4% over the past 30 days.

DB’s shares have lost 19% in the past six months.

Cullen/Frost recorded an upward earnings estimate revision of 4.9% for 2022 over the past 30 days.

The CFR stock has gained 9.2% in the past six months.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Deutsche Bank Aktiengesellschaft (DB) : Free Stock Analysis Report
CullenFrost Bankers, Inc. (CFR) : Free Stock Analysis Report
UMB Financial Corporation (UMBF) : Free Stock Analysis Report
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