SunTrust or M&T Bank: Which is a Better Major Bank Now?

SunTrust Banks, Inc. STI and M&T Bank Corporation MTB, the two major regional banks, have market capitalization of $30.5 billion and $25.4 billion, respectively. Both continue to benefit from organic growth efforts and strong balance sheet.

Both banks are influenced by the same economic backdrop as they have almost similar business operations. Further, the improving rate environment is beneficial for them. Also, they are likely to benefit from the industry’s affluence, which is anticipated in the near term, driven by lower tax rates and expectations of lesser regulations under the Trump administration.

In terms of price performance, SunTrust’s shares have gained 9.4% so far this year, while M&T Bank’s shares have risen 10.4%. Both outperformed the industry’s growth of 2.7%.

As businesses of both banks are almost similar, let’s dig deeper into to the financials, before deciding which one is the better pick.

SunTrust

SunTrust’s debt-to-equity ratio of 0.43 is below the industry average of 0.91. This reflects that the company will be in an advantageous position during stressed economic conditions.

Further, SunTrust has a dividend yield of 2.25%, which is above the industry average of 1.89%.

The company’s earnings are projected to grow 24.5% and 9.4% for 2018 and 2019, respectively. Additionally, sales are expected to increase 4.5% in 2018 and 4.2% in 2019. Also, the stock has a Growth Score of B. Our research shows that stocks with a Style Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy), offer the best upside potential.

SunTrust carries a Zacks Rank #2. Moreover, it has a Value Score of B and VGM Score of B.

M&T Bank

M&T Bank has a debt/equity ratio of 0.54, which is below the industry average of 0.91. This reflects that the company has a relatively lesser debt burden and will be financially stable in adverse economic conditions.

Furthermore, the company’s earnings are projected to be up 30.5% and 7.2% for 2018 and 2019, respectively. Additionally, sales are expected to increase 3.4% for 2018 and 3.3% for 2019. Nevertheless, the stock has a Growth Score of C.

Also, M&T Bank has a dividend yield of 1.58%, below the industry average of 1.89%.

M&T Bank has a Value Score of D and VGM Score of C. The stock carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Our Take

Both SunTrust and M&T Bank look well positioned in terms of their Zacks Rank and lesser debt burden. Though M&T Bank has brighter earnings growth prospects, SunTrust seems to be a better pick given the higher sales growth rate potential, superior dividend yield and favorable Style Scores.  

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