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Analyst Blog

On May 19, 2014, we issued an updated research report on M&T Bank Corporation (MTB - Analyst Report) – one of the major regional banks. The company exhibits decent fundamentals amid a competitive banking environment.

M&T Bank’s solid capital position is reflected by the Federal Reserve’s approval of its 2014 capital plan. We believe the company is well positioned to grow via strategic acquisitions as well.  These efforts will continue to boost investors’ confidence.

M&T Bank enjoys a competitive advantage owing to its ability to sustain growth in net interest income (NII) amid a low interest rate environment. Over the last 5 years (ended Dec 2013) net interest income has improved at a compound annual growth rate (CAGR) of 6.7%. Further, the upward trend continued in the first quarter with NII rising slightly on a year-over-year basis.

M&T Bank’s first-quarter 2014 earnings per share of $1.66 outpaced the Zacks Consensus Estimate by 3.1%. Notably, with this the company delivered positive earnings surprises in 3 of the trailing 4 quarters with an average beat of 6.7%.

Despite the positives, we remain cautious owing to several issues faced by M&T Bank that pose a threat to the company’s financials. These include absence of disciplined expense management, litigation issues and the prevailing stringent regulatory landscape.

Analysts’ mixed stance on the stock was reflected in the movement of the Zacks Consensus Estimate over the past 60 days. For 2014, the Zacks Consensus Estimate remained stable at $7.14 per share while for 2015, it moved north marginally to $8.93 per share.

M&T Bank currently carries a Zacks Rank #3 (Hold).

Stocks That Warrant a Look

KCG Holdings, Inc. (KCG - Snapshot Report), Woori Finance Holdings Co., Ltd. (WF) and Central Pacific Financial Corp. (CPF - Snapshot Report) are among the better-ranked stocks in the finance sector. All these stocks hold a Zacks Rank #1 (Strong Buy).
 

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