Is It Too Late To Consider M&T Bank After Strong Multi Year Share Price Gains

• If you are wondering whether M&T Bank at around $205 a share is still a buy or already priced for perfection, you are not alone. This article is designed to unpack that value question clearly.
• The stock has quietly climbed 1.0% over the last week, 12.7% over the past month, and is now up 9.1% year to date, building on a solid 11.9% 1 year gain and an impressive 93.0% over 5 years.
• Recent attention on regional banks, including M&T, has focused on balance sheet resilience and how well they have navigated the higher rate environment, with investors rewarding those perceived as conservative but still capable of growing. At the same time, regulatory scrutiny and shifting deposit dynamics have kept risk in the conversation, which helps explain why sentiment has improved but remains cautious rather than euphoric.
• On our framework M&T Bank scores a 4/6 valuation score, suggesting the market may not be fully recognizing its fundamentals yet. Next we will walk through standard valuation approaches, before closing with a more powerful way to think about what this stock is really worth.

Find out why M&T Bank's 11.9% return over the last year is lagging behind its peers.

Approach 1: M&T Bank Excess Returns Analysis

The Excess Returns model looks at how much profit M&T Bank can generate above the return that shareholders reasonably demand on their equity, then capitalizes that surplus to estimate what the stock should be worth today.

For M&T Bank, the starting point is a book value of $170.44 per share and a stable earnings power of $19.14 per share, based on weighted future Return on Equity estimates from 9 analysts. With an average Return on Equity of 10.41% and a cost of equity of $13.04 per share, the bank is expected to generate excess return of $6.10 per share. This suggests it can create value beyond its funding cost rather than just treading water.

Analysts also see book value compounding to a stable $183.91 per share over time, based on inputs from 12 analysts. When these excess returns are projected and discounted, the model arrives at an intrinsic value of about $343 per share, implying the stock is roughly 40.0% undervalued versus the current price near $205.

Result: UNDERVALUED

Our Excess Returns analysis suggests M&T Bank is undervalued by 40.0%. Track this in your watchlist or portfolio, or discover 914 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for M&T Bank.

Approach 2: M&T Bank Price vs Earnings

For a profitable, mature bank like M&T, the price to earnings multiple is a practical way to judge valuation because it directly links what investors pay today to the profits the business is already generating. In simple terms, the higher the expected growth and the lower the perceived risk, the higher a normal or fair PE ratio investors are usually willing to accept.

M&T currently trades at about 12.1x earnings, slightly above the broader Banks industry average of roughly 11.9x, but below the peer group average of around 13.4x. Simply Wall St also calculates a Fair Ratio of 12.7x, which represents the PE that would be justified once you factor in M&T’s specific earnings growth outlook, profitability, risk profile, size and its position within the banking industry.

This Fair Ratio is more useful than simple peer or industry comparisons because it adjusts for the things that really drive what a stock should be worth, rather than assuming all banks deserve the same multiple. With the current PE of 12.1x sitting modestly below the Fair Ratio of 12.7x, the shares look slightly undervalued on this metric.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1466 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your M&T Bank Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives, a simple way to turn your view of a company into a story that connects assumptions about future revenue, earnings and margins to a fair value estimate.

A Narrative on Simply Wall St takes your perspective on a business, translates it into a clear financial forecast, then calculates what the shares might be worth so you can directly compare that Fair Value to today’s Price and consider whether it might be a buy, hold or sell.

Available in the Community section of Simply Wall St, Narratives are easy to set up, update automatically when new news or earnings arrive, and help you see how your expectations stack up against other investors using the platform.

For example, one M&T Bank Narrative might lean bullish, assuming revenue grows around 4.5% a year, margins stay resilient and the bank is valued closer to the higher analyst target near $240. In contrast, a more cautious Narrative might emphasize deposit risk, expense pressure and regulatory uncertainty, landing nearer the bearish $175 view and indicating less potential upside from today’s price.

Do you think there's more to the story for M&T Bank? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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