Stock (Symbol) |
M&T Bank (MTB) |
Stock Price |
$164 |
Sector |
| Finance |
Data is as of |
| August 4, 2017 |
Expected to Report |
| Oct 17 |
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. Source: Thomson Financial |
Sharek’s Take |
 M&T Bank (MTB) is a quality regional bank, but with a premium price. 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. After the Presidential election the stock jumped from $120 to $170. Now MTB is around $160, but has a P/E of 18 which is high for a bank. Profits have grown 16% the past two qtrs, and the company has whipped earnings estimates along the way. Profit growth should be strong the next two qtrs as well, then simmer down. I like this quality name, but feel the good news is already priced in. MTB does buy back billions in stock, and just upped its dividend for the first time in years, and yields 2%. I am looking to buy this stock for the Conservative Growth Portfolio at a lower level. |
One Year Chart |
 Nice profit growth the last 2 qtrs, and Estimates for the next 2 qtrs as well. Last qtr the company delivered sales growth of 7% and profit growth of 16%, which beat the 12% estimate. During the last 4 qtrs 2017 profit estimates have increased from $8.48 to $8.71, $9.12 and $9.27. That’s nice. But the surge in the stock after the election has priced in a lot of good news. Qtrly Estimates are 21%, 22%, 8% and 7% so expectations are for less than 10% growth in the coming qtrs. The Est. LTG has risen from, 7% to 8% and now 10% the past three qtrs. |
Fair Value |
 My Fair Value is 17x earnings, which is the median P/E the last two years. Yes, estimates are rising and one could argue 18x earnings is a fairer valuation. But what if rates don’t rise until next year and the stock sells for 17x earnings next year? |
Bottom Line |
 M&T Bank stock’s recent recovery is due to Trump being elected president and the impact of higher interest rates. I feel rates will continue to rise and keep momentum going up. This is a fine stock for conservative investors as it’s safe, the Est. LTG is 10% a year and the stock pays a 2% dividend yield. I just would have preferred a smoother run higher. The stock jumped before the numbers did. So is all the move priced in? Will MTB be this price a year from now? I’d rather sit and wait to buy in at a lower level, and if the stock goes higher I won’t feel like I’m missing out on much. MTB is on my radar for the Conservative Growth Portfolio. I owned the stock between $100 and $125 or so and sold before the move higher as estimates had on a steady decline. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
