Umpqua Holdings Corporation (NASDAQ:UMPQ) Analysts Just Trimmed Their Revenue Forecasts By 11%

Simply Wall St
·3 min read

One thing we could say about the analysts on Umpqua Holdings Corporation (NASDAQ:UMPQ) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the downgrade, the current consensus from Umpqua Holdings' four analysts is for revenues of US$1.4b in 2022 which - if met - would reflect a meaningful 11% increase on its sales over the past 12 months. Statutory earnings per share are anticipated to dive 26% to US$1.25 in the same period. Prior to this update, the analysts had been forecasting revenues of US$1.5b and earnings per share (EPS) of US$1.30 in 2022. It looks like analyst sentiment has fallen somewhat in this update, with a substantial drop in revenue estimates and a small dip in earnings per share numbers as well.

Check out our latest analysis for Umpqua Holdings

earnings-and-revenue-growth
earnings-and-revenue-growth

Analysts made no major changes to their price target of US$19.85, suggesting the downgrades are not expected to have a long-term impact on Umpqua Holdings' valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Umpqua Holdings, with the most bullish analyst valuing it at US$22.65 and the most bearish at US$18.00 per share. This is a very narrow spread of estimates, implying either that Umpqua Holdings is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Umpqua Holdings' growth to accelerate, with the forecast 22% annualised growth to the end of 2022 ranking favourably alongside historical growth of 3.2% per annum 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 most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Umpqua Holdings going forwards.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Umpqua Holdings going out to 2024, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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