Stock (Symbol) |
M&T Bank (MTB) |
Stock Price |
$164 |
Sector |
| Finance |
Data is as of |
| January 29, 2017 |
Expected to Report |
| Apr 17 – 21 |
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) has soared 31% since $125 to $141 Donald Trump got elected President as bank stocks are in a serious rally. There’s two reasons for this monster move. First, more economic growth would boost GDP and thus interest rates. Second, Trump wants to loosen regulations and make it easier for banks to grow business in addition to paying less in compliance costs. M&T Bank 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 went from $2.50 to $100 from 1985 to 2005 then was stuck between $75 and $125 for much of the decade after than. Now we could be in a new era of growth for bank stocks. But although profit estimates have increased for MTB, the stock now sells for 19x earnings, which is above my Fair Value of 17x. Either I need to see estimates continue to climb or M&T needs to come down a bit for me to buy. |
One Year Chart |
 These numbers aren’t that great. Last qtr’s 20% growth looks good here, but was only possible because the year-ago period was bad. Profits are expected to climb 5%, 7%, 15% and 19% the next 4 qtrs, which would be a nice acceleration. In prior qtrs, profit estimates fell, but they went up this qtr. Here’s 2017 est. during the last 4 qtrs: $9.08, 8.61, 8.48 and now $8.71. MTB had been lowering estimates (and then missing them) for years. In fact, the company made $1.98 last qtr, missed analyst estimates by $0.04, and this figure came down $0.12 and $0.09 the previous qtrs. The Est. LTG of 7% is below the 10% I like, but the stock does have a high safety rating and also yields 2%. |
Fair Value |
 My Fair Value is 17x earnings, and that would mean a decline in the stock price of 10%. I don’t know what further rate hikes will do for earnings, but it seems like some of that boost is already baked into the shares. Lots of red in this profit history. |
Bottom Line |
 M&T Bank is a good company and a conservative stock. But like the rest of the banking sector the stocks have gone up in anticipation of even better days ahead. With the stock being so high, I would like to see either better profit estimates or a decline in the stock of around 10% before I invest. MTB is a good choice for conservative investors, and is on my radar for the Conservative Growth Portfolio. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
