A week ago, UMB Financial Corporation (NASDAQ:UMBF) came out with a strong set of third-quarter numbers that could potentially lead to a re-rate of the stock. The company beat expectations with revenues of US$410m arriving 2.8% ahead of forecasts. Statutory earnings per share (EPS) were US$2.23, 3.7% ahead of estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the most recent consensus for UMB Financial from five analysts is for revenues of US$2.35b in 2025. If met, it would imply a substantial 54% increase on its revenue over the past 12 months. Statutory earnings per share are forecast to descend 10% to US$7.21 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.32b and earnings per share (EPS) of US$7.14 in 2025. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 6.8% to US$127. It looks as though they previously had some doubts over whether the business would live up to their expectations. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values UMB Financial at US$137 per share, while the most bearish prices it at US$114. This is a very narrow spread of estimates, implying either that UMB Financial is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that UMB Financial's rate of growth is expected to accelerate meaningfully, with the forecast 41% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 8.2% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.5% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect UMB Financial to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on UMB Financial. Long-term earnings power is much more important than next year's profits. We have forecasts for UMB Financial going out to 2026, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with UMB Financial , and understanding this should be part of your investment process.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
