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Mitsubishi UFJ (MTU) on Acquisition Spree: Time to Buy?

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On Sep 6, we issued an updated research report on Mitsubishi UFJ Financial Group, Inc. .

Despite elevated expenses, negative interest rates in Japan, uncertain global economy and a stringent regulatory landscape, this Japanese investment banking firm has been consistently growing through acquisitions on the back of its strong liquidity position. Further, it remains focused on its business upgradation plan.

Mitsubishi UFG has been continuously expanding inorganically. The company closed its business alliance deal with Hitachi, Ltd., in October 2016, to expand its operations. Earlier in April 2016, it had acquired a 20% stake in Security Bank Corporation to spread out its business in Southeast Asia. In addition, last December, the company acquired the Alternative Fund Services business of UBS Global Asset Management.

Moreover, Mitsubishi UFG remains focused on the company’s Medium-term Business Plan (2016-2018) that includes upgradation and reformation of its business model and exploration of new business areas. Also, it enjoys a solid liquidity position due to its robust customer base in Japan and depositors’ preference for large financial institutions for the safety of deposits.

Hence, considering these tailwinds, Mitsubishi UFG reaffirmed its target of ¥950 billion of consolidated net income for the fiscal year ending Mar 31, 2018, reflecting a rise of 2.5% year over year.

The Zacks Consensus Estimate moved up 4.8% and 6.1%, to 65 cents and 70 cents, respectively, for fiscal 2018 and 2019, over the last month.

Further, shares of this Zacks Rank #2 (Buy) company have gained 13.3% over the past year compared with 18.4% growth recorded by the industry it belongs to.

Other Key Picks

Other top-ranked stocks in the same space are Bank of Nova Scotia (The) (BNS - Free Report) , Canadian Imperial Bank of Commerce (CM - Free Report) and Bank of Montreal (BMO - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Bank of Nova Scotia’s earnings estimates have been revised 6.5% upward for fiscal 2017, in the past 30 days. Also, its share price on the NYSE surged 15.2% over the last year.

Bank of Montreal’s earnings estimates for 2017 have been revised 6.3% upward, over the last month. Further, in a year’s time, the company’s shares have jumped 9.2%.

Canadian Imperial Bank of Commerce witnessed a 7% upward earnings estimates revision for the current year in a month’s time. Moreover, in the past year, its shares have gained 7.2%.

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