It’s been a good week for M&T Bank Corporation (NYSE:MTB) shareholders, because the company has just released its latest third-quarter results, and the shares gained 6.0% to US$106. M&T Bank reported US$1.5b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$2.75 beat expectations, being 5.5% higher than what the analysts expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
View our latest analysis for M&T Bank
Following the latest results, M&T Bank’s ten analysts are now forecasting revenues of US$5.76b in 2021. This would be a decent 13% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to shrink 7.1% to US$10.02 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$5.80b and earnings per share (EPS) of US$9.89 in 2021. So it’s pretty clear that, although the analysts have updated their estimates, there’s been no major change in expectations for the business following the latest results.
The analysts reconfirmed their price target of US$122, showing that the business is executing well and in line with expectations. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company’s valuation. There are some variant perceptions on M&T Bank, with the most bullish analyst valuing it at US$159 and the most bearish at US$92.00 per share. This shows there is still a bit of diversity in estimates, but analysts don’t appear to be totally split on the stock as though it might be a success or failure situation.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It’s clear from the latest estimates that M&T Bank’s rate of growth is expected to accelerate meaningfully, with the forecast 13% revenue growth noticeably faster than its historical growth of 4.5%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 1.4% per year. Factoring in the forecast acceleration in revenue, it’s pretty clear that M&T Bank is expected to grow much faster than its industry.
The Bottom Line
The most obvious conclusion is that there’s been no major change in the business’ prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year’s earnings. We have estimates – from multiple M&T Bank analysts – going out to 2024, and you can see them free on our platform here.
However, before you get too enthused, we’ve discovered 1 warning sign for M&T Bank that you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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