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Is an Earnings Beat in the Cards for M&T Bank (MTB) in Q4?

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M&T Bank Corporation (MTB - Free Report) is scheduled to report fourth quarter and 2018 results on Jan 17, before the opening bell. The company’s revenues and earnings are expected to improve from the year-ago quarter.

M&T Bank’s third-quarter 2018 results displayed top-line improvement supported by rising margins. Further, lower provisions for credit losses were reported. The company surpassed the Zacks Consensus Estimate backed by these factors. Also, fall in expenses was another positive.

The bank’s earnings surprise history seems impressive as it delivered positive earnings surprises in each of the trailing four quarters, the average beat being 7.1%.

M&T Bank Corporation Price and EPS Surprise

Activities of M&T Bank during the October-December quarter were adequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for the quarter has been revised slightly upward over the past seven days. Also, the consensus estimate of $3.51 indicates an increase of 32% in the bank’s earnings from the prior-year quarter.

Overall, the Zacks Consensus Estimate projects year-over-year revenue growth of 3.3% to $1.50 billion for the to-be-reported quarter.

Factors to Influence Q4 Results

Net Interest Income (NII) Likely to Rise: The quarter witnessed a moderate improvement in the lending scenario primarily in commercial and Industrial, and consumer front. Thus, loan growth, combined with support from expanding margins on the back of rising interest rates, are likely to boost M&T Bank’s NII. However, flattening yield curve is likely to offset the benefit to some extent.

Muted Fee Income Growth: Since performance of the equity markets was not very impressive during the fourth quarter, M&T Bank is unlikely to receive much support from related fees. Also, debt origination fees will likely remain low due to rising rates curbing involvement in these activities.

Furthermore, with the rising interest-rate environment, no major help is expected from the mortgage banking segment. As refinancing activities slowed down during the quarter, mortgage banking revenues are not expected to witness much improvement.

Expenses to Trend Higher: Expenses are projected to trend higher in the quarter due to the company’s continued investments in several areas, including operational infrastructure and technology.

Finally, let’s have a look at what our quantitative model predicts:

According to our quantitative model, chances of M&T Bank beating the Zacks Consensus Estimate in the fourth quarter are high. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for M&T Bank is +0.80%.

Zacks Rank: M&T Bank currently carries a Zacks Rank #3.

Other Stocks to Consider

Here are some other stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around.

U.S. Bancorp (USB - Free Report) is slated to release results on Jan 16. It has an Earnings ESP of +0.26% and currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Comerica Inc. (CMA - Free Report) is scheduled to release results on Jan 16. It has an Earnings ESP of +0.63% and a Zacks Rank #3.

Zions Bancorp. (ZION - Free Report) has an Earnings ESP of +0.75% and it currently carries a Zacks Rank of 3. The company is slated to release results on Jan 22.

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