Stock (Symbol) |
M&T Bank (MTB) |
Stock Price |
$118 |
Sector |
| Finance |
Data is as of |
| May 2, 2016 |
Expected to Report |
| Jul 14 – Jul 18 |
Company Description |
 M&T Bank Corporation (M&T) is a bank holding company. As of December 31, 2012, M&T had two wholly owned bank subsidiaries: M&T Bank and Wilmington Trust, National Association (Wilmington Trust, N.A.). The banks collectively offer a range of retail and commercial banking, trust, wealth management and investment services to their customers. The Company conducts lending activities in various states through other subsidiaries. M&T Bank and certain of its subsidiaries also offer commercial mortgage loans secured by income producing properties or properties used by borrowers in a trade or business. Additional financial services are provided through other operating subsidiaries of the Company. Its segments include Business Banking, Commercial Banking, Commercial Real Estate, Discretionary Portfolio, Residential Mortgage Banking and Retail Banking. Source: Thomson Financial |
Sharek’s Take |
 M&T Bank (MTB) was founded in 1856 and has a heavily concentrated presence of more than 700 branches in the New York/Maryland surrounding area, where it is the number one small business lender. Berkshire Hathaway owns around 5% of the company and management puts profits to shareholders first. MTB has been profitable in every quarter the past 36 years and during the last 30 years a third of profits have gone to dividends, another third to repurchase shares, and the rest for retained capital. It’s the only commercial bank in the S&P 500 to weather the financial crisis without cutting its dividend or raising capital. What fueled growth is acquisitions, as the company closed around 25 in the last 25 years. MTB was stuck in neutral the past decade, but from 1985 to 2005 it went from $2.50 to $100. M&T just acquired Hudson City Bancorp and will now have a bigger presence in the New York City surrounding area, but the profit figures haven’t increased. At first glance MTB is expected to have 15% profit growth this year, but that’s not great considering profits fell 12% last year. In fact the company made $8.38 in 2013 and is expected to make $8.24 this year. Also, MTB has missed analyst estimates in each of the past 4 qtrs as 2016 profit estimates have declined from $9.20 to $8.24 during that time. At 14x earnings this safe stock is slightly undervalued with good upside to 2017, and pays a 2% yield, but if estimates continue to erode the stock could be around this price next year (as it was last year). |
One Year Chart |
 Yes this one-year chart is a sea of red, and honestly so are the numbers not shown here. Specifically, earnings estimates have fallen across the board in each of the last 4 qtrs. I mean qtrly estimates and annual estimates — each one have fallen each qtr. AND MTB has missed estimates the last 4 qtrs. Now qtrly Estimates show 5%, 10%, 33%* and 9% profit growth ahead, but there’s an asterisk by the 33% as profits were really bad in the year-ago-period thus these are easy comparisons. |
Fair Value |
 Earnings are expected to hit record highs next year. We’ll see. MTB was expected to make $10.82 in 2017 just 4 qtrs ago and that figure has already slipped to $9.08 — and we still have 7 qtrs to go before 2017 is in the books. Also, the dividend isn’t increasing. My Fair Value is 15x earnings as interest rates are rising and Hudson City Bancorp should be good for profits…but maybe I’ll reduce my Fair Value to 14x earnings next qtr. |
Bottom Line |
 M&T Bank is a conservative bank stock with an estimated long-term growth rate of 9% per year plus a 2% yield. In theory that means investors could be making 11% per year. But MTB has eroding profit estimates and thus the stock’s stock in a trading range. Higher interest rates should help profits, but since the deterioration in estimates has gone on so long I’m taking a wait-and-see approach. MTB ranks 32nd in the 35 stock Conservative Growth Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio 32 of 35 |
