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Here Are 5 Reasons to Bet on Mitsubishi UFJ (MUFG) Right Now
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Mitsubishi UFJ Financial Group, Inc. (MUFG - Free Report) stock is a good investment option right now, supported by its expansion initiatives, a strong deposit balance and liquidity. Its steady capital distribution activities aimed at enhancing shareholder value is another positive.
The Zacks Consensus Estimate for MUFG's 2024 earnings has been revised 5.4% upward over the past 60 days. This shows that analysts are optimistic regarding the company’s earnings growth prospects. Mitsubishi UFJ currently carries a Zacks Rank #2 (Buy).
Shares of MUFG have gained 25.3% on the NYSE in the past six months compared with 7.9% growth recorded by the industry.
Image Source: Zacks Investment Research
Mentioned below are a few factors that make MUFG stock a solid pick now:
Strategic Expansion Initiatives: Since 2016, the company has expanded inorganically and continues to pursue such opportunities that bode well for the future. In June 2023, Mitsubishi UFJ, through MUFG Bank and PT Adira Dinamika Multi Finance Tbk, announced the acquisition of 80.6% shares in PT Mandala Multifinance Tbk. With this, it is likely to expand its auto loan business in Indonesia.
In November 2022, MUFG announced plans to acquire respective 100% and 80% stakes in Home Credit B.V.’s units — HC Consumer Finance Philippines, Inc. (HC Philippines) and PT Home Credit Indonesia (HC Indonesia). With these acquisitions, the bank seeks to further expand its retail business in Asia.
Strong Deposit Balance: The primary source of liquidity for MUFG is its large balance of deposits, particularly ordinary deposits, certificates of deposits and time deposits. The company’s deposits witnessed a compound annual growth rate (CAGR) of 1.8% during the five-year period (ended March 2023), with the rising trend continuing in the first half of fiscal 2024. This is mainly owing to MUFG’s broad customer base in Japan and depositors’ preference to seek the safety of deposits at large financial institutions.
Strong Liquidity: As of Sep 30, 2023, the company had cash and due from banks of ¥108.63 trillion and borrowed money worth ¥24.97 trillion. Given a sound cash balance, the company’s debt level seems manageable. Also, as of Nov 6, 2023, it enjoys an investment-grade long-term credit rating of A- from Standard & Poor’s and A1 from Moody’s. This renders the company favorable access to debt at attractive rates and lowers the likelihood of default of interest and debt repayments if the economic situation worsens.
Encouraging Capital Distribution Activities: Mitsubishi UFJ’s capital distributions are sustainable on a solid liquidity position. Its dividends witnessed a four-year (ended fiscal 2022) CAGR of 9.8%. The company pays interim and year-end dividends on a regular basis.
The company also has a share repurchase authorization in place. In November 2023, it announced a ¥400 billion share repurchase program for repurchasing up to 400 million shares, valid from Nov 15, 2023 to Mar 31, 2024. Progressing on the share buybacks, between Nov 15 and Nov 30, 2023, it repurchased 40.2 million shares of its common stock for approximately ¥51 billion. Such strategic moves enhance shareholders’ value and boost investors’ confidence in the stock.
Favorable Valuation: Mitsubishi UFJ has a Value Score of B. The Value Style Score condenses all valuation metrics into one actionable score, helping investors steer clear of value traps and identify stocks that are truly trading at a discount. Our research shows that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
Other Bank Stocks Worth a Look
A couple of other top-ranked stocks from the banking space are Byline Bancorp (BY - Free Report) and Mercantile Bank (MBWM - Free Report) .
The Zacks Consensus Estimate for Byline Bancorp's current-year earnings has been revised 1.4% upward over the past seven days. Its shares have gained 14.2% in the past six months. Currently, BY carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Mercantile Bank sports a Zacks Rank #1 at present. Earnings estimates for 2023 have been revised 5.1% upward over the past 60 days. In the past six months, MBWM shares have rallied 25.1%.
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Here Are 5 Reasons to Bet on Mitsubishi UFJ (MUFG) Right Now
Mitsubishi UFJ Financial Group, Inc. (MUFG - Free Report) stock is a good investment option right now, supported by its expansion initiatives, a strong deposit balance and liquidity. Its steady capital distribution activities aimed at enhancing shareholder value is another positive.
The Zacks Consensus Estimate for MUFG's 2024 earnings has been revised 5.4% upward over the past 60 days. This shows that analysts are optimistic regarding the company’s earnings growth prospects. Mitsubishi UFJ currently carries a Zacks Rank #2 (Buy).
Shares of MUFG have gained 25.3% on the NYSE in the past six months compared with 7.9% growth recorded by the industry.
Image Source: Zacks Investment Research
Mentioned below are a few factors that make MUFG stock a solid pick now:
Strategic Expansion Initiatives: Since 2016, the company has expanded inorganically and continues to pursue such opportunities that bode well for the future. In June 2023, Mitsubishi UFJ, through MUFG Bank and PT Adira Dinamika Multi Finance Tbk, announced the acquisition of 80.6% shares in PT Mandala Multifinance Tbk. With this, it is likely to expand its auto loan business in Indonesia.
In November 2022, MUFG announced plans to acquire respective 100% and 80% stakes in Home Credit B.V.’s units — HC Consumer Finance Philippines, Inc. (HC Philippines) and PT Home Credit Indonesia (HC Indonesia). With these acquisitions, the bank seeks to further expand its retail business in Asia.
Strong Deposit Balance: The primary source of liquidity for MUFG is its large balance of deposits, particularly ordinary deposits, certificates of deposits and time deposits. The company’s deposits witnessed a compound annual growth rate (CAGR) of 1.8% during the five-year period (ended March 2023), with the rising trend continuing in the first half of fiscal 2024. This is mainly owing to MUFG’s broad customer base in Japan and depositors’ preference to seek the safety of deposits at large financial institutions.
Strong Liquidity: As of Sep 30, 2023, the company had cash and due from banks of ¥108.63 trillion and borrowed money worth ¥24.97 trillion. Given a sound cash balance, the company’s debt level seems manageable. Also, as of Nov 6, 2023, it enjoys an investment-grade long-term credit rating of A- from Standard & Poor’s and A1 from Moody’s. This renders the company favorable access to debt at attractive rates and lowers the likelihood of default of interest and debt repayments if the economic situation worsens.
Encouraging Capital Distribution Activities: Mitsubishi UFJ’s capital distributions are sustainable on a solid liquidity position. Its dividends witnessed a four-year (ended fiscal 2022) CAGR of 9.8%. The company pays interim and year-end dividends on a regular basis.
The company also has a share repurchase authorization in place. In November 2023, it announced a ¥400 billion share repurchase program for repurchasing up to 400 million shares, valid from Nov 15, 2023 to Mar 31, 2024. Progressing on the share buybacks, between Nov 15 and Nov 30, 2023, it repurchased 40.2 million shares of its common stock for approximately ¥51 billion. Such strategic moves enhance shareholders’ value and boost investors’ confidence in the stock.
Favorable Valuation: Mitsubishi UFJ has a Value Score of B. The Value Style Score condenses all valuation metrics into one actionable score, helping investors steer clear of value traps and identify stocks that are truly trading at a discount. Our research shows that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
Other Bank Stocks Worth a Look
A couple of other top-ranked stocks from the banking space are Byline Bancorp (BY - Free Report) and Mercantile Bank (MBWM - Free Report) .
The Zacks Consensus Estimate for Byline Bancorp's current-year earnings has been revised 1.4% upward over the past seven days. Its shares have gained 14.2% in the past six months. Currently, BY carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Mercantile Bank sports a Zacks Rank #1 at present. Earnings estimates for 2023 have been revised 5.1% upward over the past 60 days. In the past six months, MBWM shares have rallied 25.1%.