Why M&T Bank (MTB) Should Be Added To Your Portfolio Now

With organic and inorganic growth strategies, as well as a strong capital position, M&T Bank Corporation (NYSE:MTB) can be a solid bet now. The company’s focus on the most attractive business mixes in the banking industry to tackle macroeconomic headwinds and strategic priorities, including core technology infrastructure, is expected to yield positive results for the stock.

Further, the recent hikes in interest rates are likely to further stabilize the top line, in turn, creating a buying opportunity for long-term horses. Though increasing risk and compliance requirements remain a concern for M&T Bank, given the strictly regulated nature of banking operations, management is taking steps to tackle expense growth and reinstate operating leverage. This, in turn, is likely to make the growth path smoother.

Therefore, it’s a good idea to add stocks with robust fundamentals and long-term growth opportunities to your portfolio, at the current level.

With $370.9 billion in assets as of Mar 31, 2017, M&T Bank’s strengths include solid top-line performance, inorganic growth strategy and steady capital deployment activities.

7 Reasons Why M&T Bank is an Attractive Buy Now

Revenue Growth: M&T Bank continues to make steady progress toward improving its top line. Since 2008, the company has recorded a consistent rise in its net interest income. Over the last six years (ended Dec 2016), it has grown at a compound annual growth rate (CAGR) of nearly 7.7%, with the trend continuing in first-quarter 2017.

The company’s projected sales growth (F1/F0) of 7.04% (as against the S&P 500 average of about 4.66%) indicates constant upward momentum in revenues.

Earnings Per Share Strength: Earnings are anticipated to display an upswing in the near term, as the company’s projected EPS growth (F1/F0) is 13.6% compared to the industry average rate of 10.9%. Also, M&T Bank recorded an average positive earnings surprise of 3.44%, over the trailing four quarters.

Inorganic Growth Routes: Given its robust liquidity position, M&T Bank is well positioned to grow via acquisitions. The growth has been reflected in the company’s accomplishment of several major acquisitions in and out of the U.S., in the last several years. The completion of the merger with Hudson City in Nov 2015 expanded the company’s retail branch network in eastern U.S., with access to 135 Hudson branches, situated primarily in New Jersey. Further, product and balance-sheet diversification, stemming from the acquisition, will likely support the company’s top line.

Favorable Zacks Rank: M&T Bank currently sports a Zacks Rank #1 (Strong Buy). This has been driven by the upward estimate revisions, over the last 30 days. For 2017 and 2018, the Zacks Consensus Estimate moved up around 4.6% and 2.7% to $9.17 and $10.06, respectively.

Steady Capital Deployment: M&T Bank’s capital deployment activities remain impressive. The company’s 2016 capital plan was approved by the Fed after submission of revised capital actions. The plan included share buyback of up to $1.15 billion over the four-quarter period, which commenced in Jul 2016. In addition, following the approval, the quarterly common stock dividend was raised 7% in Feb 2017.

Stock is Undervalued: M&T Bank has a P/E ratio and P/B ratio of 17.33x and 1.63x compared to the S&P 500 average of 18.61x and 3.30x, respectively. Based on these ratios, the stock seems undervalued.

Share Price Movement: M&T Bank’s shares gained 19.6% over the last six months compared with 13.2% growth recorded by the Zacks categorized Banks-Major Regional industry.

Stocks to Consider

Comerica Incorporated (NYSE:CMA) has been witnessing upward estimate revisions for the last 30 days. Additionally, the stock jumped over 27.5% over the past six months. It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Northern Trust Corporation (NASDAQ:NTRS) has been witnessing upward estimate revisions for the last 30 days. Also, the company’s shares have risen nearly 15.8% over the last six months. It presently holds a Zacks Rank #2.

The PNC Financial Services Group, Inc. (NYSE:PNC) has been witnessing upward estimate revisions for the last 30 days. Over the last six months, the company’s share price has been up more than 16.6%. It carries a Zacks Rank #2.

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