Stock (Symbol) |
M&T Bank (MTB) |
Stock Price |
$141 |
Sector |
| Finance |
Data is as of |
| November 19, 2016 |
Expected to Report |
| Jan 17 – 23 |
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) shot up 13% from $125 to $141 after Donald Trump got elected President. But MTB’s numbers continue to disappoint. 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 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 didn’t increase from the deal. MTB has missed analyst profit estimates in each of the last 9 qtrs, and has also had Annual Profit Estimates decline the last 4 qtrs. News of rising interest rates ahead has helped the banking stocks, which have gotten a lot of juice from an inflow of funds into Financial ETFs. At this stage M&T Bank seems fairly valued here, and I feel the bank needs to up earnings estimates to move higher. |
One Year Chart |
 So not only has MTB missed estimates the last 4 qtrs, but the company has had each estimate lowered three straight qtrs before missing at the end. For instance last qtr the bank made $1.99 and missed by 6 cents. But that was lowered by 10 cents, 7 cents and 5 cents in the qtrs before that. 2016 estimates have fallen from $8.48 to $7.89 during the past 4 qtrs. Also, qtrly growth doesn’t look so hot with 22%, 3%, 4% and 12% profit growth estimated for the next 4 qtrs. The 22% qtr has easy comparisons from the year-ago period when profits fell 14%. Even the Est. LTG of 5% doesn’t look good, as that figure is down from 9% since May. |
Fair Value |
 My Fair Value is 16x earnings, which is a $136 stock price at this time. I say “at this time” because estimates could increase with interest rates set to rise. |
Bottom Line |
 M&T Bank is a conservative bank stock that was great to own 20-30 years ago. The stock hasn’t done great this past decade as low interest rates have hampered growth. But the good news is rates are set to rise. My issue now is how much will they rise and how much will that affect annual profit estimates — that’s the big question. I sold MTB from the Conservative Growth Portfolio earlier this year but If you own it I think you should continue to hold it. I will continue to monitor the stock, but won’t buy it back until I get more clarity on how much MTB can make. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
