From the vast universe of banking stocks, today we pick M&T Bank Corporation (MTB - Free Report) for you. The company 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 macro-economic 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 30 days, the Zacks Consensus Estimate for 2020 and 2021 displayed an upward trend.
Further, this Zacks Rank #2 (Buy) stock has gained 1.8%, in the past three months, against the industry’s decline of 2.5%.
Notably, M&T Bank has a number of other aspects which 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 continued rise in net interest income. Over the last five years (ended 2019), it witnessed a compound annual growth rate (CAGR) of nearly 9.8%.
Earnings Per Share Strength: Earnings are anticipated to display an upswing in the near term, as the company’s projected EPS growth (F1/F0) is 1.85%. Also, M&T Bank expects long-term EPS growth rate (3-5 years) of 5.71%.
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, will likely boost the company’s top line.
Steady Capital Deployment: M&T Bank’s capital-deployment activities are impressive. The company’s 2019 capital plan was approved by the Fed. The plan included net capital distributions of up to $1.9 billion over the four-quarter period, effective July 2019. Further, in November 2019, the company increased its quarterly common stock dividend by 10%.
Stock is Undervalued: The stock currently has a Value Score of B. The Value Score condenses all valuation metrics into one actionable score that helps investors steer clear of “value traps” and identify stocks that are truly trading at a discount. Our research shows that stocks with a Style Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
Superior Return on Equity (ROE): M&T Bank’s ROE of 13.37%, as compared with the industry average of 11.95%, highlights the company’s commendable position over its peers.
Strong Leverage: M&T Bank’s debt/equity ratio is valued at 0.48 compared with the industry average of 0.86, indicating a relatively lower debt burden. It highlights the financial stability of the company even amid adverse economic conditions.
Other Stocks to Consider
MidWestOne Financial Group, Inc. (MOFG - Free Report) has been witnessing upward estimate revisions for the last 30 days. Additionally, the stock jumped nearly 12%, in the last six months. It currently sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Citigroup (C - Free Report) has been witnessing upward estimate revisions for the last 30 days. Additionally, the stock has jumped more than 15% in the past six months. It currently carries a Zacks Rank #2.
Farmers National Banc Corp. (FMNB - 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 14%. It currently flaunts a Zacks Rank of 1.
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