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M&T Bank (MTB) Rallies 16% YTD: What's Driving the Stock?

Zacks Equity Research

M&T Bank Corporation’s MTB shares have rallied nearly 16% year to date compared with the industry’s growth of 10.4%. This price performance is backed by an improving operating environment and inorganic growth strategies, such as expansion of mortgage servicing business, which will help boost top line.

Further, analysts are bullish on this Zacks Rank #2 (Buy) stock as it has been witnessing upward estimate revisions for earnings in 2019 and 2020 over the past 30 days.

Moreover, the stock has a Momentum Score of A. 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.

Let’s take a look at other fundamentals that indicate further upside potential of the stock:

Earnings Per Share (EPS) Strength: Earnings are anticipated to display an upswing in the near term, as the company’s projected EPS growth (F1/F0) is 14% compared with the industry average rate of 9.32%. Also, M&T Bank pulled off an average positive earnings surprise of 5.2% over the trailing four quarters.

Inorganic Growth Efforts: Given its robust liquidity position, M&T Bank is well positioned to grow on the back of acquisitions. The company’s several major buyouts globally over the past several years are reflective of it.

Steady Capital Deployment: M&T Bank’s capital deployment activities are impressive. The company’s 2018 capital plan was approved by the Federal Reserve. The plan included share buyback of up to $1.8 billion over the four-quarter period, effective July 2018. Further, in August 2018, the company increased its quarterly common stock dividend by 25%.

Superior Return on Equity (ROE):M&T Bank’s ROE of 14.46% compared with the industry average of 12.69%, highlights its commendable position over its peers.

Strong Leverage: M&T Bank’s debt/equity ratio is valued at 0.59 compared with the industry average of 0.91, indicating a relatively lower debt burden. It highlights the financial stability of the company even in adverse economic conditions.

Other Stocks to Consider

Some better-ranked stocks in the same space are Orrstown Financial Services ORRF, CNB Financial Corporation CCNE and Citizens Financial Services Inc. CZFS. All these stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Orrstown Financial’s current-year earnings has remained stable for 2019 in the past 30 days. Also, its share price has increased 16.7% in the past six months.

CNB Financial’s current-year earnings estimates have been revised 2.1% upward over the past 30 days. Further, the company’s shares have rallied 18.1% in the past six months.

The Zacks Consensus Estimate for Citizens Financial Services’ current-year earnings has been revised nearly 1% upward over the past 30 days. Moreover, in the past six months, its shares have gained 8.1%.

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