UMB Financial

UMB Financial Corp receives a 3-star quantitative star rating, illustrating our stance that this share class is a balanced choice, but prudent investors should consider looking elsewhere. The stock currently trades at a 5% discount to our quantitative fair value estimate of $137.32 per share; however, caution is warranted due to this estimate's high uncertainty rating.

The firm's valuation metrics increase our estimated fair value. A company's valuation metrics provide insights into the market's expectations for its future growth and profitability. For example, the firm's book value yield of 77.8% ranks in the top 40% compared with global peers. The market price is low relative to the book (accounting) value of the company's equity, which contributes to our view that shares are undervalued.

The firm's solid growth is an additional encouraging factor. Consistent revenue and earnings growth indicates a company's potential for increased market share and profitability. The firm's revenue 3-year growth of 28.1%, for example, ranks in the top 20% compared with global peers. Robust trailing three-year revenue growth portends a favorable future trajectory, which further promotes our favorable price/fair value ratio.

In addition to the aforementioned drivers, our model considers momentum as part of its comprehensive analysis. This share class has outperformed the broader universe over the past year. While we believe the stock is undervalued, this outperformance had a negative impact on our valuation estimate.

The narrow moat rating for this company indicates investors can expect it to generate 10 years or more of excess returns on capital due to its respectable competitive advantages. Its moat is bolstered by its strong financial health, which indicates low near-term bankruptcy risk.