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6 Reasons to Add M&T Bank (MTB) Stock to Your Portfolio Now

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M&T Bank Corporation (MTB - Free Report) offers a profitable investment opportunity based on organic and inorganic growth strategies, as well as a robust capital position. 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 anticipated to yield positive results.

The stock has been witnessing upward estimate revisions, reflecting analysts’ optimism about its earnings growth potential. Over the past 60 days, the Zacks Consensus Estimate for 2021 and 2022 has been revised 12.4% and 3.6%, respectively, upward.

Further, this Zacks Rank #2 (Buy) stock has gained 50.5% in the past six months compared with the industry’s growth of 49.5%.

Notably, M&T Bank has a number of other aspects that make it an attractive investment option.

Why M&T Bank is a Golden Egg  

Revenue Growth: M&T Bank continues to make steady progress toward bolstering its revenues. Since 2008, the company has recorded a rise in net interest income. Though NII declined in 2020 on lower interest rates, it witnessed a compound annual growth rate (CAGR) of 9.8% between 2015 and 2019.

Also, M&T Bank’s non-interest income has been rising due to revival in the mortgage market and improved trading environment.

Earnings Strength: Over the past three to five years, earnings of M&T Bank witnessed 11.8% growth, above the industry average of 7.5%. Further, the company’s earnings are projected to be up 20.7% and 1.1% for 2021 and 2022, respectively. Also, M&T Bank expects long-term EPS growth rate (three-five years) of 13.4%.

Also, the company has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 10.7%.

Inorganic Growth Routes: Given its robust liquidity position, M&T Bank is well positioned to grow on acquisitions. This growth has been reflected in the company’s accomplishment of several major acquisitions in and out of the United States, over the past several years. In addition, product and balance-sheet diversification, stemming from acquisitions, is likely to boost the company’s top line.

M&T Bank recently entered into an all stock deal worth $7.6 billion to acquire People's United. Post the deal completion, the combined company will have about $200 billion in assets and a network of more than 1,100 branches and above 2,000 ATMs across 12 states from Maine to Virginia and the District of Columbia.

Steady Capital Deployment: M&T Bank’s capital-deployment activities are impressive. Following the second round of stress test results by the Fed, M&T Bank’s board of directors authorized a stock repurchase program of up to $800 million of shares of common stock. Moreover, favorable debt/equity ratio when compared to the broader industry along with consistent performance indicates that these moves are sustainable.

Superior Return on Equity (ROE): M&T Bank’s ROE of 9.24% compared with the industry average of 8.09% highlights the company’s commendable position over its peers.

Strong Leverage: M&T Bank’s debt/equity ratio is valued at 0.29 compared with the industry average of 0.75, indicating a relatively lower debt burden. It highlights the financial stability of the company even amid adverse economic conditions.

Other Stocks to Consider

UMB Financial Corporation (UMBF - Free Report) has been witnessing upward estimate revisions for the past 30 days. Additionally, the stock has jumped nearly 82% in the past six months. It currently sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Webster Financial Corporation (WBS - Free Report) has been witnessing upward estimate revisions for the past 30 days. Additionally, the stock has jumped more than 120% in the past six months. It currently carries a Zacks Rank #2.

Washington Federal, Inc. (WAFD - Free Report) has been witnessing upward estimate revisions for the past month. Over the past six months, the company’s share price has been up more than 42%. It currently carries a Zacks Rank of 2.

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