| Stock (Symbol) | Stock Price | |
M&T Bank (MTB) |
$107 |
|
| Data is as of | Expected to Report | Sector |
June 26, 2013 |
Jul 15 – Jul 19 |
Financial |
| Sharek’s Take | ||
 Today I will purchase M&T Bank (MTB) for the Growth Portfolio because interest have risen and rising rates benefit banks which make more off lending. M&T Bank is one of the most conservative regional banks in America. The company 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 #1 SBA lender. MTB has been profitable in every quarter the past 36 years and Berkshire Hathaway owns around 5% of the company. MTB management puts profits to shareholders first, during the last 30 years a third of profits have gone to dividends, another third to repurchase shares, and the rest for retained capital. To fuel growth, M&T Bank is big into acquisitions, with 23 in the last 25 years, including Provident Bancshares, Wilmington Trust and most recently Hudson City Bancorp. These acquisitions have helped MTB double its size during the last 6 years. |
||
| One-Year Chart | ||
 Bonds rates have gone higher the last two weeks, and you can see Smart Money pushed MTB to a 52-week high on the news. MTB has an estimated long-term growth rate of 7.5% and pays a 2.5% dividend for a total expected return of 11%. Although the 13 P/E seems reasonable, I predict the P/E will push to 16. |
||
| Earnings Table | ||
 Quarterly profits at MTB aren’t consistent. Last quarter’s profits rose 32% from the year-ago-period but the year-ago-period had -6% profit growth. Sales rose 9% last quarter. MTB beat the street by 2 cents, but these figures also aren’t reflective of MTB stock. 2013 annual profits are expected to be 11% higher than the 2006 all-time high. MTB stock’s 2006 high was $125 per share. I feel the stock should go over $125. Quarterly estimates don’t look great, due to tough comparisons, but are scheduled to rebound in 2014. |
||
| Fair Value | ||
 Since 2003, MTB has grown EPS 17% per year, the stock has had a median P/E of 16 or 17 during 6 of the last 10 years. |
||
| Ten-Year Chart | ||
 MTB has gone from around $1.50 to more than $100 the past 20 years. The 2008 financial debacle dominates this ten year chart, but otherwise MTB has been on a 30 year steady rise up other than a slight dip in 1998-1999. $2,743 invested in M&T in 1980 would be worth $1 million at the end of 2012. |
||
| Power Ranking | Bottom Line | |
Growth Portfolio
14 of 20 |
M&T Bank doesn’t have the growth most of my other stocks do. What it does have is safety and timeliness, now that bond rates have risen. I think we can make 20% on this stock, then hold it for the long-term and continue to make double-digit returns per year. Today I will buy MTB in the Growth Portfolio where it will rank 14th of 20 stocks in the Power Rankings. This stock doesn’t have a high enough LTG for the Aggressive Growth Portfolio. |
|
Aggressive Growth Portfolio
N/A |
||
