M&T Bank Earnings Preview: Q4 EPS Expected to Double
M&T Bank (NYSE: MTB), one of three banks in Warren Buffett's Berkshire Hathaway (NYSE: BRK-B) portfolio, is scheduled to report its fourth-quarter and full-year results Wednesday, January 16 before market open. Investors will be keeping an eye on such things as the lender's net interest margin, nonperforming loan ratio, operating expenses and return on equity.
Analysts on average predict that M&T Bank will report that revenue grew about 10 percent year-over-year to $1.12 billion. And quarterly earnings of $2.18 per share are also expected. That compares to a profit of $1.04 per share in the same period of last year. That consensus EPS estimate is up in the past 60 days from $2.15. Note that M&T Bank exceeded the consensus EPS estimate in the past three quarters -- by more than 17 percent in the third quarter.
The lender attributed the third-quarter earnings results to higher mortgage banking revenue, increases in taxable-equivalent net interest income, a lower provision for credit losses and lower operating expenses. The share price jumped more than seven percent following that earnings report.
For the full year, analysts expect to see earnings of $7.57 per share, up from $6.35 per share in the previous year. That consensus estimate has risen in the past 60 days from a $7.50 per share. And the consensus forecast also has revenue that is less than eight percent higher year-over-year to $4.28 billion.
M&T Bank provides commercial and retail banking services to individuals, corporations and institutions at about 780 retail locations in the United States and Canada. The S&P 500 component has a market capitalization near $13.1 billion, was founded in 1856 and is headquartered in Buffalo, New York. Robert G. Wilmers has been chief executive for more than five years.
Competitors include KeyCorp (NYSE: KEY) and PNC Financial Services (NYSE: PNC). The former is expected to offer up essentially flat fourth-quarter and full-year earnings when it reports later this month. The consensus forecast for PNC calls for fourth-quarter earnings growth, but full-year EPS that are lower, relative to the previous year. It reports on Thursday.
During the three months that ended in December, M&T Bank saw 1.2 million warrants held by the Treasury auctioned, and many of its branches were closed for a time by Hurricane Sandy. And it continued to adjust to its acquisition of Hudson City Bancorp earlier in the year.
The long-term EPS growth forecast is more than 11 percent, but the price-to-earnings (P/E) ratio is higher than the industry average. And the company's return on equity is a little more than nine percent. The short interest is more than six percent of the float. Of the 23 analysts surveyed by Thomson/First Call who follow the stock, just six recommend buying shares, though none recommend selling. Their mean price target represents less than four percent potential upside, but it would be a new multi-year high.
The share price is almost 27 percent higher than six months ago, including up more than four percent in the past two weeks. The share price is above the 50-day and 200-day moving averages. Over the past six months, the stock has outperformed the two competitors mentioned and the broader markets.
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