6 Reasons To Include M&T Bank (MTB) In Your Portfolio Now
Zacks Investment Research | Mar 05, 2018 08:48PM ET
M&T Bank Corporation (NYSE:MTB) appears to be a solid bet right now because of its sound organic and inorganic growth strategies. The bank experienced growth in revenues along with loan and deposit balances, over the last few years. Also, the improving economic backdrop, such as increasing interest rates and tax reform, are likely to further support its financials.
M&T Bank not only beat estimates in the fourth quarter but also has been witnessing upward estimate revisions, reflecting analysts’ optimism about its prospects. Over the last 30 days, the Zacks Consensus Estimate for both 2018 and 2019 inched up nearly 1%.
Further, this Zacks Rank #2 (Buy) stock has gained around 16% over the past year compared with 14.6% growth recorded by the industry it belongs to.
What Makes M&T Bank an Attractive Pick
Revenue Growth: M&T Bank continues to make steady progress toward bolstering its revenues. Over the last six years (ended December 2017), it has seen a compound annual growth rate (CAGR) of nearly 6.9%. Also, the company’s projected sales growth (F1/F0) of 3.4% indicates constant upward momentum in revenues.
Earnings Per Share Strength: Earnings are anticipated to display an upswing in the near term, as the company’s projected EPS growth (F1/F0) is 30.5% compared with the industry average rate of 25.6%. Also, M&T Bank recorded an average positive earnings surprise of 4.84%, over the trailing four quarters.
Impressive Balance Sheet Growth: The company’s loans and deposits have witnessed a CAGR of 8.1% and 9.4%, respectively, over a five-year period (ended 2017). This keeps M&T Bank well poised for any opportunistic acquisitions in the future.
Inorganic Growth Routes: Given its robust liquidity position, M&T Bank is well positioned to grow on the back of acquisitions. The growth has been reflected in the company’s several major acquisitions in and outside of the United States, in the last several years. The completion of the merger with Hudson City in November 2015 expanded the company’s retail branch network in the Eastern United States, with access to 135 Hudson branches, situated primarily in New Jersey. Further, product and balance-sheet diversification, stemming from the acquisition, will likely support the company’s top line.
Steady Capital Deployment: M&T Bank’s capital deployment activities remain impressive. The company announced an additional share buyback plan of up to $745 million in February 2018. Further, it’s 2017 capital plan includes a dividend hike on common stock in the range of 5-80 cents per share to be provided in second-quarter 2018.
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Strong Leverage: M&T Bank’s debt/equity ratio is valued at 0.54 compared with the industry average of 0.91, indicating relatively lower debt burden. This highlights the financial stability of the company even in adverse economic conditions.
Other Stocks to Consider
Some other top-ranked stocks in the same space are Citigroup (NYSE:C) , Comerica Incorporated (NYSE:CMA) and Northern Trust Corporation (NASDAQ:NTRS) , each carrying a Zacks Rank of 2. You can see .
The Zacks Consensus Estimate for Citigroup has been revised 6.3% upward for the current year in the last 60 days. The company’s share price has increased 23.5% in the past year.
Comerica has witnessed 14.5% upward earnings estimate revision for 2018 in the last 60 days. Its share price has surged 34.9% in the past year.
Northern Trust’s shares have gained 21.3% in a year and its earnings estimates for 2018 have moved up 9.9% in the last 60 days.
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