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Surging Earnings Estimates Signal Upside for UMB (UMBF) Stock

Zacks Equity Research
·2 min read

Investors might want to bet on UMB Financial (UMBF), as earnings estimates for this company have been showing solid improvement lately. The stock has already gained solid short-term price momentum, and this trend might continue with its still improving earnings outlook.

The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this bank holding company, should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- is principally built on this insight.

The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.

Consensus earnings estimates for the next quarter and full year have moved considerably higher for UMB, as there has been strong agreement among the covering analysts in raising estimates.

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The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:

12 Month EPS

Current-Quarter Estimate Revisions

For the current quarter, the company is expected to earn $1.96 per share, which is a change of +1.55% from the year-ago reported number.

The Zacks Consensus Estimate for UMB has increased 6.7% over the last 30 days, as three estimates have gone higher compared to no negative revisions.

Current-Year Estimate Revisions

For the full year, the earnings estimate of $8.04 per share represents a change of +0.5% from the year-ago number.

There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, one estimate has moved up for UMB versus no negative revisions. This has pushed the consensus estimate 13.42% higher.

Favorable Zacks Rank

Thanks to promising estimate revisions, UMB currently carries a Zacks Rank #1 (Strong Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.

Bottom Line

UMB shares have added 5% over the past four weeks, suggesting that investors are betting on its impressive estimate revisions. So, you may consider adding it to your portfolio right away to benefit from its earnings growth prospects.

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UMB Financial Corporation (UMBF) : Free Stock Analysis Report

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Zacks Investment Research