Need To Know: Analysts Just Made A Substantial Cut To Their Umpqua Holdings Corporation (NASDAQ:UMPQ) Estimates

October 04, 2022
  •  Updated
November 06, 2022
NasdaqGS:UMPQ
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Today is shaping up negative for Umpqua Holdings Corporation (NASDAQ:UMPQ) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

After this downgrade, Umpqua Holdings' four analysts are now forecasting revenues of US$1.4b in 2022. This would be a decent 14% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to nosedive 29% to US$1.20 in the same period. Before this latest update, the analysts had been forecasting revenues of US$1.6b and earnings per share (EPS) of US$1.34 in 2022. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a considerable drop in earnings per share numbers as well.

View our latest analysis for Umpqua Holdings

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NasdaqGS:UMPQ Earnings and Revenue Growth October 4th 2022

Despite the cuts to forecast earnings, there was no real change to the US$19.85 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Umpqua Holdings analyst has a price target of US$22.65 per share, while the most pessimistic values it at US$18.47. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Umpqua Holdings' past performance and to peers in the same industry. It's clear from the latest estimates that Umpqua Holdings' rate of growth is expected to accelerate meaningfully, with the forecast 30% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 3.2% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 7.6% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Umpqua Holdings to grow faster than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Umpqua Holdings. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Umpqua Holdings after the downgrade.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Umpqua Holdings analysts - going out to 2024, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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Find out whether Umpqua Holdings is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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