Will This Upgrade Positively Impact M&T Bank (MTB) Today?

NEW YORK (TheStreet) -- M&T Bank Corp. (MTB) was upgraded to "buy" from "neutral" at Goldman Sachs (GS) on Monday based on the firm's belief the holding company's planned purchased of Hudson City Bancorp (HCBK) will add to earnings.

M&T Bank announced its intent to purchase its rival in August 2012, but the deal has been delayed a number of times.

M&T is working to calm concerns the Federal Reserve has regarding its Bank Security Act and anti-money laundering program, The Buffalo News reported.

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Both banks are looking to finalize the acquisition before the end of this year.

Separately, TheStreet Ratings team rates M & T BANK CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate M & T BANK CORP (MTB) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The gross profit margin for M & T BANK CORP is currently very high, coming in at 91.38%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 20.03% is above that of the industry average.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 9.0%. Since the same quarter one year prior, revenues slightly dropped by 1.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • M & T BANK CORP's earnings per share declined by 18.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, M & T BANK CORP increased its bottom line by earning $8.20 versus $7.54 in the prior year. For the next year, the market is expecting a contraction of 6.7% in earnings ($7.65 versus $8.20).
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Commercial Banks industry and the overall market on the basis of return on equity, M & T BANK CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • You can view the full analysis from the report here: MTB Ratings Report
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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