M&T slipped after a soft third quarter, but loan growth, steady fees and heavy buybacks support $21.75 of 2027 profit. At 11.5 times, I see 16% upside plus a 2.9% dividend yield.
Key points
- $5.04 a share for Q3 FY26 fell from $5.32 for Q2 FY26 as net margin slipped to 3.65% for Q3 FY26.
- $2.6 billion loan growth for Q3 FY26 came from commercial property plus consumer and home loans with deposits higher on average.
- 10.16% core capital for Q3 FY26 funds a $5.0 billion buyback with 1.3 million shares retired for Q3 FY26.
The call
The market sees a lender stuck after a soft quarter. At $215.28 on Oct 16 2026 the shares trade at 11.0 times my $19.56 a share for FY26.
Diluted profit per share is growing through buybacks- Reported EPS
- Muse forecast
Company releases through Oct 16, 2026; Q4 FY26E onward are Muse estimates.
Growth should beat that flat view. I expect $21.75 a share for FY27 on loan growth plus servicing fees with shares down to 140.0 million for FY27.
From $5.04 today to $21.75 of 2027 profit per shareMuse estimates from Oct 16, 2026 release and Q4 guidance. Shares in millions.
Valuation
| Item | Figure |
|---|
| 2027 profit per share | $21.75 a share for FY27 |
| Target multiple | 11.5 times for FY27 |
| 12-month target | $250.13 on Oct 16 2027 |
| Cash dividend next year | $6.30 a share for FY27 |
| Total return with dividend | 19.1% for next 12 months |
| Peers trade near 11.0 to 13.0 times profit for FY27. M&T merits 11.5 times profit for FY27 for steady credit and buybacks. Upside of 16.2% for next 12 months plus 2.9% yield for FY27 supports a buy. | |
Risks
- Deposit costs stay high and squeeze margin for Q4 FY26, the gap between loan yields and funding costs, seen in monthly deposit costs.
- Office and care property loans sour and lift $1.30 billion nonaccrual loans for Q3 FY26, loans no longer earning interest, seen in quarterly credit data.
- Tech bills keep 54.4% cost ratio for Q3 FY26, costs as a share of revenue, from falling, seen in quarterly expense reports.
What would change my mind
I would turn cautious if average loans stall through Q2 FY27 while flagged loans rise for two straight quarters.