M&T Bank Corporation
) closed at $114.30 on Dec 6, recording a year-to-date return of
16.1%. Impressive organic growth, solid liquidity position and
continuous improvement in credit quality were the driving forces
behind this growth story. Hence, we do not discourage keeping its
shares in your portfolio.
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However, we are not very confident that these positive factors
will translate into further price appreciation going forward as a
sluggish economic recovery and stringent regulatory requirements
would put considerable pressure on its top line. Consequently,
adding more shares of M&T Bank to your portfolio may not be a
Why This Stance?
M&T Bank's third-quarter 2013 earnings per share outpaced the
Zacks Consensus Estimate. Results reflected top-line growth and a
strong capital position. However, higher expenses were a matter
of concern for the quarter.
M&T Bank's solid liquidity position enhance investment in
strategic acquisitions, paving the way for further growth. The
most recent Hudson City deal will not only aid M&T in
leveraging its top line through Hudson City's retail network but
also help in expanding its franchise in eastern U.S. Moreover,
the company has witnessed growth in loan balances and a gradual
improvement in its credit quality over the last few years.
However, it is expected that a stressed and challenging
macroeconomic environment and a stringent regulatory landscape
will affect the profitability as well as efficiency ratio of the
company. Moreover M&T Bank's earnings asset is expected to
grow modestly owing to a slow pace of economic recovery.
Additionally, the Zacks Consensus Estimate has not been in trend
when it comes to estimate revisions. Over the last 60 days, the
Zacks Consensus Estimate for 2013 declined 1.4% to $8.57 per
share, while for 2014 it declined almost 6% to $8.31 per share.
M&T Bank currently carries a Zacks Rank #3 (Hold).
Other Stocks to Consider
If you are interested in the finance sector, you may consider a
few better-ranked stocks like
First Interstate Bancsystem Inc.
German American Bancorp Inc
Mainsource Financial Group
). All these stocks carry a Zacks Rank #1 (Strong Buy).