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5 Reasons to Add Mitsubishi UFJ (MUFG) to Your Portfolio Now
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Mitsubishi UFJ Financial Group, Inc. (MUFG - Free Report) stock looks like an attractive investment option now. The company is well-positioned for organic and inorganic growth, given its solid balance sheet and liquidity position, and strategic partnerships and acquisitions.
Analysts seem optimistic regarding the company’s earnings growth prospects. Over the past 60 days, the Zacks Consensus Estimate for MUFG’s 2024 earnings has been revised 11.4% upward. Mitsubishi UFJ currently sports a Zacks Rank #1 (Strong Buy).
In the past year, shares of MUFG have gained 18.8% on the NYSE compared with the industry’s 8.8% growth.
Image Source: Zacks Investment Research
A few factors mentioned below make the stock worth betting on now.
Earnings Growth: Mitsubishi UFJ witnessed earnings growth of 2.6% in the past three to five years. While the company’s earnings are projected to decline in fiscal 2025, the trend will reverse after that. In fiscal 2026, earnings are expected to grow 13.64%.
Moreover, the company’s long-term (next five years) projected earnings growth rate is 13.30%, which is higher than the industry’s 11.8%.
Synergies From Opportunistic Buyouts and Partnerships: Over the last several years, Mitsubishi UFJ has been expanding inorganically and continues to pursue growth opportunities globally. Since 2016, the bank has completed several acquisitions and partnerships to expand its footprint.
On Aug 2, 2024, MUFG and its consolidated subsidiary, MUFG Bank, announced their plans to invest in Globe Fintech Innovations, Inc., the firm that manages GCash. Through this strategic investment, Mitsubishi UFJ aims to reap the benefit of fast-growing digital finance in the Asia Pacific (APAC) region. It will also enhance the bank’s business franchise value over the medium to long term. Through this investment, MUFG intends to grow its customer base while seeking further business collaboration opportunities within its network.
In May 2024, MUFG’s subsidiary, Mitsubishi UFJ Trust and Banking Corporation, completed the buyout of Link Administration Holdings Limited by acquiring all issued shares of the latter. This expands its operations globally via access to Australian funds and corporate clients worldwide.
In 2023, the company, through MUFG Bank and PT Adira Dinamika Multi Finance Tbk, announced the acquisition of 80.6% shares in PT Mandala Multifinance Tbk. With this, the company expands its auto loan business in Indonesia. These, along with prior deals, will continue to be accretive to the company’s earnings.
Business Transformation Efforts: MUFG is focused on its updated Medium-term Business Plan (2024 to 2026), which emphasizes on improving social and environmental progress and accelerating transformation and innovation. With this, it aims to increase return on equity to around 9% in fiscal 2026.
MUFG aims to boost product offerings, expand distribution channels, strengthen the balance sheet and drive growth through seven strategic initiatives. These include strengthening the domestic retail customer base, reinforcing corporate and wealth management segments, and evolving the integrated business model of its Global Corporate & Investment Banking and Global Markets groups. Additionally, the company aims to fortify its APAC operations and enhance platform resilience.
Steady Capital Distributions: Mitsubishi UFJ is rewarding its investors handsomely. The company increased its dividend for fiscal 2024 to ¥50 per share from ¥41 and aims to maintain a payout ratio of 40%. Apart from this, it has a share repurchase program in place.
In May 2024, the bank announced a share repurchase program worth ¥100 billion valid from May 16 to Jun 30, 2024. Progressing on the share buybacks, it bought back 370.3 million shares of its common stock at an aggregate price of ¥59.8 billion between Jun 1, 2024, and Jun 21, 2024. Thus, by leveraging the capital surplus, the bank aims to attract investors by progressive increases in dividends and executing flexible share repurchases.
Strong Balance Sheet Position: As of Jun 30, 2024, MUFG had cash and due from banks of ¥107.5 trillion. The company’s borrowed money totaled ¥25.5 trillion during the same period. Hence, given a strong liquidity profile, MUFG seems well-positioned to continue meeting debt obligations and sustain its capital distribution activities.
NatWest Group’s earnings estimates for 2024 have been revised 7.1% upward in the past 30 days. NWG’s shares have gained 49.6% over the past six months.
BNP Paribas’s 2024 earnings estimates have revised 1% upward in the past 30 days. BNPQY’s shares have gained 8.2% over the past six months.
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5 Reasons to Add Mitsubishi UFJ (MUFG) to Your Portfolio Now
Mitsubishi UFJ Financial Group, Inc. (MUFG - Free Report) stock looks like an attractive investment option now. The company is well-positioned for organic and inorganic growth, given its solid balance sheet and liquidity position, and strategic partnerships and acquisitions.
Analysts seem optimistic regarding the company’s earnings growth prospects. Over the past 60 days, the Zacks Consensus Estimate for MUFG’s 2024 earnings has been revised 11.4% upward. Mitsubishi UFJ currently sports a Zacks Rank #1 (Strong Buy).
In the past year, shares of MUFG have gained 18.8% on the NYSE compared with the industry’s 8.8% growth.
Image Source: Zacks Investment Research
A few factors mentioned below make the stock worth betting on now.
Earnings Growth: Mitsubishi UFJ witnessed earnings growth of 2.6% in the past three to five years. While the company’s earnings are projected to decline in fiscal 2025, the trend will reverse after that. In fiscal 2026, earnings are expected to grow 13.64%.
Moreover, the company’s long-term (next five years) projected earnings growth rate is 13.30%, which is higher than the industry’s 11.8%.
Synergies From Opportunistic Buyouts and Partnerships: Over the last several years, Mitsubishi UFJ has been expanding inorganically and continues to pursue growth opportunities globally. Since 2016, the bank has completed several acquisitions and partnerships to expand its footprint.
On Aug 2, 2024, MUFG and its consolidated subsidiary, MUFG Bank, announced their plans to invest in Globe Fintech Innovations, Inc., the firm that manages GCash. Through this strategic investment, Mitsubishi UFJ aims to reap the benefit of fast-growing digital finance in the Asia Pacific (APAC) region. It will also enhance the bank’s business franchise value over the medium to long term. Through this investment, MUFG intends to grow its customer base while seeking further business collaboration opportunities within its network.
In May 2024, MUFG’s subsidiary, Mitsubishi UFJ Trust and Banking Corporation, completed the buyout of Link Administration Holdings Limited by acquiring all issued shares of the latter. This expands its operations globally via access to Australian funds and corporate clients worldwide.
In 2023, the company, through MUFG Bank and PT Adira Dinamika Multi Finance Tbk, announced the acquisition of 80.6% shares in PT Mandala Multifinance Tbk. With this, the company expands its auto loan business in Indonesia. These, along with prior deals, will continue to be accretive to the company’s earnings.
Business Transformation Efforts: MUFG is focused on its updated Medium-term Business Plan (2024 to 2026), which emphasizes on improving social and environmental progress and accelerating transformation and innovation. With this, it aims to increase return on equity to around 9% in fiscal 2026.
MUFG aims to boost product offerings, expand distribution channels, strengthen the balance sheet and drive growth through seven strategic initiatives. These include strengthening the domestic retail customer base, reinforcing corporate and wealth management segments, and evolving the integrated business model of its Global Corporate & Investment Banking and Global Markets groups. Additionally, the company aims to fortify its APAC operations and enhance platform resilience.
Steady Capital Distributions: Mitsubishi UFJ is rewarding its investors handsomely. The company increased its dividend for fiscal 2024 to ¥50 per share from ¥41 and aims to maintain a payout ratio of 40%. Apart from this, it has a share repurchase program in place.
In May 2024, the bank announced a share repurchase program worth ¥100 billion valid from May 16 to Jun 30, 2024. Progressing on the share buybacks, it bought back 370.3 million shares of its common stock at an aggregate price of ¥59.8 billion between Jun 1, 2024, and Jun 21, 2024. Thus, by leveraging the capital surplus, the bank aims to attract investors by progressive increases in dividends and executing flexible share repurchases.
Strong Balance Sheet Position: As of Jun 30, 2024, MUFG had cash and due from banks of ¥107.5 trillion. The company’s borrowed money totaled ¥25.5 trillion during the same period. Hence, given a strong liquidity profile, MUFG seems well-positioned to continue meeting debt obligations and sustain its capital distribution activities.
Other Finance Stocks to Consider
Some other top-ranked finance stocks are NatWest Group plc (NWG - Free Report) and BNP Paribas SA (BNPQY - Free Report) , each sporting a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
NatWest Group’s earnings estimates for 2024 have been revised 7.1% upward in the past 30 days. NWG’s shares have gained 49.6% over the past six months.
BNP Paribas’s 2024 earnings estimates have revised 1% upward in the past 30 days. BNPQY’s shares have gained 8.2% over the past six months.