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Can Higher Revenues Support M&T Bank's (MTB) Q1 Earnings?

Zacks Equity Research

M&T Bank Corporation MTB is scheduled to report first-quarter 2019 results on Apr 15, before the opening bell. The company’s revenues and earnings are expected to improve from the year-ago quarter.

M&T Bank’s fourth-quarter 2018 results surpassed the Zacks Consensus Estimate on top-line improvement supported by rising margins and loan growth. However, rise in expenses and lower deposit balances were headwinds.

Notably, M&T Bank has an impressive earnings surprise history, having delivered positive earnings surprises in each of the trailing four quarters, the average beat being 6.3%.

M&T Bank Corporation Price and EPS Surprise

M&T Bank Corporation Price and EPS Surprise | M&T Bank Corporation Quote

A Surprise in Store?

Our proven model shows that M&T Bank has the right combination of the two key ingredients — 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 +0.05%.

Zacks Rank: The company currently carries a Zacks Rank of 3.

Though estimates for the to-be-reported quarter have been revised slightly downward over the last seven days, the Zacks Consensus Estimate for earnings of $3.29 reflects growth of 11.9% year over year. Also, the consensus estimate for sales of $1.51 billion indicates an increase of 5.2%. 

Factors to Drive Q1 Results

Net Interest Income (NII) Likely to Rise: The quarter witnessed 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 partial impact of December rate hike, is likely to support M&T Bank’s NII. However, flattening of yield curve is expected to offset the benefit to some extent.

Muted Fee Income Growth: The company might witness growth in trust revenues on the back of strong equity market in the first quarter. However, given the high 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 likely to witness much improvement. Thus, overall slight growth in other income is expected for the to-be-reported quarter.

Expenses to Trend Higher: Expenses are projected to trend higher in the quarter due to seasonally higher compensation costs and M&T Bank’s continued investments in several areas, including operational infrastructure and technology.

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.

Comerica Incorporated CMA is scheduled to release results on Apr 16. It has an Earnings ESP of +0.52% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Bank of New York Mellon Corporation BK is scheduled to release results on Apr 17. The company, which carries a Zacks Rank of 3, has an Earnings ESP of +0.63%.

The Earnings ESP for First Republic Bank FRC is +1.27% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Apr 12.

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