NEW YORK (TheStreet) -- Umpqua Holdings (UMPQ) has been downgraded to "sector perform" from "outperform" with a $20 price target, RBC Capital said Tuesday. The firm said its rating revision was due to a weaker core earnings outlook.
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Separately, TheStreet Ratings team rates UMPQUA HOLDINGS CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate UMPQUA HOLDINGS CORP (UMPQ) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its expanding profit margins, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for UMPQUA HOLDINGS CORP is currently very high, coming in at 92.48%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 17.38% is above that of the industry average.
- Net operating cash flow has significantly increased by 386.52% to $53.78 million when compared to the same quarter last year. Despite an increase in cash flow, UMPQUA HOLDINGS CORP's cash flow growth rate is still lower than the industry average growth rate of 430.57%.
- Compared to its closing price of one year ago, UMPQ's share price has jumped by 40.77%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 11.8%. Since the same quarter one year prior, revenues slightly dropped by 9.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- UMPQUA HOLDINGS CORP's earnings per share declined by 12.0% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, UMPQUA HOLDINGS CORP reported lower earnings of $0.87 versus $0.91 in the prior year. This year, the market expects an improvement in earnings ($1.06 versus $0.87).
- You can view the full analysis from the report here: UMPQ Ratings Report