M&T Bank Corporation
) has delivered positive earnings surprises in three of the last
four quarters; most recently beating by nearly 17.9% in the third
quarter. This Zacks #1 Rank (Strong Buy) commercial bank hit its
52-week high on October 18, a day after its results were announced.
The company pays a regular quarterly dividend that yields a decent
2.7% and the stock has gained 37.6% since the beginning of this
Impressive Third Quarter Earnings
On October 17, M&T Bank Corporation reported third quarter
earnings per share of $2.17, topping the Zacks Consensus Estimate
of $1.84 by 17.9% and the year-ago earnings of $1.32 by 64.0%. The
improvement was primarily due to revenue growth, prudent expense
management and a lower provision for credit losses.
Net interest income climbed 7.5% year over year to $663 million,
driven by an increase in average earning assets and a widening of
the net interest margin. The net interest margin expanded nine
basis points on a year-over-year basis to 3.77%. Non-interest
income rose 21.0% to $446 million over the same period. The
company's non-interest expenses decreased 7.0% year over year to
Credit quality reflected an improvement at M&T Bank
Corporation. Provision for credit losses waned 21.0% year over year
to $46 million and net charge-offs dipped 26.3% to $42 million. Net
charge-offs, as a percentage of average loans outstanding, were
0.26%, down from 0.39% in the prior-year quarter.
Earnings Estimate Revisions Moving Higher
The Zacks Consensus Estimate for 2012 is up 7.9% to $7.48 in the
past 30 days as 19 of 20 total estimates moved higher. The Zacks
Consensus Estimate for 2013 advanced 6.5% to $8.21 on upward
revisions from 17 of 20 estimates.
The Zacks Consensus Estimate for 2012 reflects year-over-year
growth of about 15.4%, while the expected growth rate for 2013 is
M&T Bank Corporation is one of the few banks that maintained
its dividend payment throughout the financial crisis. Currently,
the company pays a quarterly dividend of 70 cents per share,
affirming an annual yield of 2.7%.
Valuation Looks Reasonable
Shares of M&T Bank Corporation currently trade at 14.0x
12-month forward earnings, a 20.0% premium to the peer group
average of 11.7x. Its price to book ratio of 1.5 is at a 36%
premium to the industry median of 1.1. The company has a trailing
12-month ROE of 10.4% compared with the peer group average of 9.8%.
Chart Shows Strength
M&T Bank Corporation has witnessed sturdy price momentum since
August 2012. Moreover, the company has been continuously
outperforming its 200-day and 50-day moving averages over the last
three months, exhibiting a steady growth trend. The year-to-date
return for the stock came in at 37.6% compared with the S&P
500's return of 13.6%.
With rising estimates, strong growth projections, a reasonable
valuation and a decent dividend yield, M&T Bank Corporation
looks like a promising pick for investors seeking both growth and
Headquartered in Buffalo, New York, M&T Bank Corporation,
operating as the holding company for M&T Bank, provides various
banking products and services. The company was founded in 1856 and
conducts business through 780 retail and commercial branches and
2,000 ATMs located in 8 states, the District of Columbia, and
Ontario, Canada. With a market cap of about $13.3 billion, M&T
Bank Corporation competes with SunTrust Banks, Inc. (
), among others.
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