M&T Bank’s 14.5% return over the past six months has outpaced the S&P 500 by 6.5%, and its stock price has climbed to $239.99 per share. This run-up might have investors contemplating their next move.
Is there a buying opportunity in M&T Bank, or does it present a risk to your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free.
Why Is M&T Bank Not Exciting?
We’re glad investors have benefited from the price increase, but we’re swiping left on M&T Bank for now. Here are three reasons you should be careful with MTB, plus one stock we’d rather own.
1. Lackluster Revenue Growth
We at StockStory place the most emphasis on long-term growth, but within financials, a stretched historical view may miss recent interest rate changes, market returns, and industry trends. M&T Bank’s recent performance shows its demand has slowed as its annualized revenue growth of 3% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs. 
Note: Quarters not shown were determined to be outliers because they were impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.
2. Projected Net Interest Income Growth Is Slim
Forecasted net interest income by Wall Street analysts signals a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect M&T Bank’s net interest income to rise by 3.3%.
3. Projected TBVPS Growth Is Slim
Tangible book value per share (TBVPS) growth comes from a bank’s ability to profitably lend while maintaining prudent risk management and efficient operations.
Over the next 12 months, Consensus estimates call for M&T Bank’s TBVPS to grow by 5.9% to $122.72, lousy growth rate.
Final Judgment
M&T Bank’s business quality ultimately falls short of our standards. With its shares topping the market in recent months, the stock trades at 1.3× forward P/B (or $239.99 per share). Investors with a higher risk tolerance might like the company, but we think the potential downside is too great. We’re fairly confident there are better investments elsewhere. Let us point you toward one of Charlie Munger’s all-time favorite businesses.
Stocks We Would Buy Instead of M&T Bank
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