Umpqua Holdings Corporation (NASDAQ:UMPQ), operating in the financial services industry based in United States, saw a decent share price growth in the teens level on the NasdaqGS over the last few months. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Today I will analyse the most recent data on Umpqua Holdings’s outlook and valuation to see if the opportunity still exists. See our latest analysis for Umpqua Holdings

What’s the opportunity in Umpqua Holdings?

According to my valuation model, the stock is currently overvalued by about 63%, trading at US$23.14 compared to my intrinsic value of $14.17. This means that the buying opportunity has probably disappeared for now. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that Umpqua Holdings’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Umpqua Holdings look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Umpqua Holdings’s earnings over the next few years are expected to increase by 57.70%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in UMPQ’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe UMPQ should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on UMPQ for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for UMPQ, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.