BMO Stock Overview
Bank of Montreal provides diversified financial services primarily in North America.
Bank of Montreal Competitors
Price History & Performance
|Historical stock prices|
|Current Share Price||CA$103.91|
|52 Week High||CA$122.77|
|52 Week Low||CA$90.44|
|1 Month Change||12.88%|
|3 Month Change||0.50%|
|1 Year Change||1.01%|
|3 Year Change||48.08%|
|5 Year Change||42.81%|
|Change since IPO||1,023.35%|
Recent News & Updates
TD Bank Vs. Bank of Montreal - U.S. Takeover Showdown
TD Bank and Bank of Montreal both have U.S. deals in the works. TD is working on buying First Horizon, BMO is going after Bank of the West. Both banks' deals face regulatory hurdles but most experts think they'll eventually close. In this article, I try to determine which Canadian bank stock is a better buy in light of its U.S. deal-making. The Toronto-Dominion Bank (TD) and Bank of Montreal (BMO) are both in the process of doing large U.S. acquisitions. In December of 2021, BMO announced that it would purchase Bank of the West from BNP Paribas (OTCQX:BNPQF) for US$13.4 billion. A few months later, TD Bank announced a deal of its own. In a press release dated February 28, TD announced that it would be buying First Horizon (FHN) for US$13.4 billion–the exact same amount that BMO offered for Bank of the West. The response to both deals was mixed. BMO received praise for its Bank of the West deal, but later took criticism from community groups for alleged discriminatory practices. TD’s FHN deal was immediately greeted with concerns about valuation, and later received criticism from a group of senators who alleged that TD was guilty of abusive practices. Public opposition notwithstanding, U.S. expansion is very important to both TD and BMO. Canada’s financial services market is saturated by six big banks, leaving little room for domestic growth. For this reason, Canadian banks generally look to the U.S. for expansion. So far, TD has been the most successful of its peer group in pushing into the U.S.; it earns a full 36% of its net income from U.S. retail. However, BMO isn’t too far behind, with approximately 29% of adjusted net income coming from its U.S. segment. In fact, BMO has an even higher percentage of income coming from the U.S. on a reported basis, though that’s mainly due to the sale of a subsidiary. TD has more U.S.-source income than BMO on a normalized basis. Expansion into the U.S. is very important for Canadian banks. The U.S. is a massive market in which banks have a lot of room to grow. It’s also more fragmented than the Canadian market, giving an edge to banks that consolidate market share. So it makes a lot of sense for TD and BMO to expand there. The question is, which of the two banks is better positioned to grow in the U.S. going forward? TD has the bigger U.S. business for now, but BMO’s deal gives it more U.S.-based assets. It appears, then, that the latter is better positioned for U.S. growth, assuming we’re looking at just the value of the banks’ deals, and none of the other factors. However, the other factors are definitely worth exploring, as I’ll demonstrate in the ensuing paragraphs. Ultimately, I conclude that TD and BMO are both great stocks, but that TD’s deal is slightly more attractive than BMO’s. BMO - the Existing Business Before looking at BMO’s M&A deal, we need to look at the business as a whole. BMO already has a large presence in the U.S., so we need to understand how Bank of the West will add to that presence. The Bank of Montreal is Canada’s third biggest bank. It is the second most “American” Canadian bank after TD, with 29% of adjusted earnings coming from the USA. Overall, BMO boasts: US$810 billion in total assets. C$17 billion in year-to-date revenue. C$7.6 billion in year-to-date net income. C$4.7 billion in year-to-date adjusted net income. US$9.4 billion in trailing 12-month net income. C$50 million in provisions for credit losses (“PCL”), down from $60 million. A 16% CET1 ratio, up from 13%. From these metrics, we can calculate a 0.9% return on assets (trailing 12-month) and 27.6% adjusted net margin (year to date). These metrics are both very strong. The profit margin is high by the standards of any industry, while the 0.9% return on assets is higher than TD’s 0.81%. The CET1 ratio is more than double what regulations require, and is rising over time. So, BMO is a pretty solid bank financially speaking. One possible area of weakness here is the PCLs. At $50 million, they’re only 2.9% of 12-month revenue. This year, Canadian housing is in a freefall, with sales down 47%, and prices down 20% from February. In the meantime, the Bank of Canada is raising interest rates, so homeowners with variable rate mortgages are paying more interest on increasingly less valuable homes. It seems like this situation could lead to a lot of defaults, but BMO is expecting only 2.9%. Perhaps, then, its business is vulnerable in a scenario where Canada’s housing market crashes further. As far as valuation goes, BMO is pretty cheap. Trading at just 9 times GAAP earnings, 7 times adjusted earnings, and 1.4 times book value, it’s a real bargain. Banks are generally cheap, but even Bank of America (BAC) has a double-digit P/E ratio. So, if you’re looking for cheap, high-yielding stocks, BMO has what you’re looking for. BMO - Bank of the West Deal Having looked at BMO’s total business, it’s time to turn to the bank’s upcoming deal. As we’ve seen, BMO is pretty cheap at today’s prices, and has a solid balance sheet. Those are good things, but they won’t be as good in the future if BMO overpays for its acquisition. So, we have to look at that deal in detail. BMO is paying $13.4 billion for Bank of the West. For that sum, it’s getting: US$105 billion in assets. 1.8 million customers. US$974 million in annual earnings power. A strategic position in the California market. At $13.4 billion, BMO is paying $13.75 for every dollar of earnings Bank of the West generated in 2021. It could be that earnings have grown since 2021, as the COVID-19 crisis was still negatively impacting bank earnings in the first quarter of that year. However, BNP Paribas’ first half earnings release doesn’t list Bank of the West’s earnings separately from the rest of the company, so 2021 earnings are what we have to go on. Therefore, we’ll estimate that the “deal P/E ratio” for BMO’s Bank of the West deal is 13.75–not insanely high, but higher than average for a bank. The amount being paid for the assets looks more enticing. With a $13.4 billion purchase price, BMO is paying $0.127 for every dollar in assets it’s getting from this deal. That’s higher than the same ratio for BMO’s own stock (about $0.081) but it compares favourably to the price TD is paying for First Horizon’s assets, as I’ll show momentarily. TD Bank - the Existing Business TD Bank is Canada’s second-biggest bank by market cap, and the largest by total assets. It’s the most American Canadian bank, with 36% of earnings coming from the United States, and a huge equity stake in Charles Schwab (SCHW). As of this writing, TD boasted: US$1.4 trillion in assets. US$34 billion in revenue. US$19 billion in net interest income. US$11.5 billion in net income. A 10.5% CET1 ratio. US$60 million in PCLs.
Bank of Montreal Is Now Finally Investable With A 4.3%+ Yield
In this article, I'll be taking a look at the popular Bank of Montreal and update my thesis now that we're in a significantly cheaper situation. Bank of Montreal is a great bank - and at a cheap valuation, this bank becomes a "BUY". While not the most undervalued "BUY" or the highest upside or yield, this is an A+ rated company with a double-digit upside - it's worth your time and attention. Dear readers, I've written about Bank of Montreal (BMO) a few times over the past years since I've been an active contributor on SA. I've held positions in the bank a few times during that time as well, though I've often favored other Canadian banks above BMO. However, with the situation the way it currently is, I now believe we have an upside to consider for Bank of Montreal - and that upside is pretty decent, especially compared to historical upsides. Let me show you what I mean. Bank of Montreal - updating on this bank In my last article, I made it clear that it was time to "BUY" more BMO. Now, since that time, the bank is down 4.5%, including dividends, but this is only a marginal change which only puts the bank, as I see it, at a greater upside. Ending 2021 well, the company has since reported the initial period of 2022 as well as 2Q22. This period, like 1Q22, came in at appealing levels, seeing good income, EPS, efficiency, RoE, and fundamentals, including retaining a 14%+ CET1 ratio. Like in 1Q22, the 2Q22 results saw improvements, with adjusted EPS of $3.23 and pretax earnings growth on a YoY basis of 6%. This comes to a 12% YTD increase, driven not only by a good backdrop but strong revenue growth coupled with expert expense management. That's also why the bank felt comfortable increasing the dividend 5% QoQ, and 31% YoY, driving the current yield up. BMO IR BMO is a bank - which means that technically speaking, impacts to its NII and overall interest rate adjustments in the upward direction are actually positive for BMO. Banks and financial companies, unlike some other companies, tend to do very well in rising interest rate environments, provided that they're well-structured and conservatively managed. BMO certainly is that - and its continued YTD RoE of 17.2% up from a YoY number continues to show the bank becoming more and more positive as an investment. With Canadian pandemic restrictions lifted, the economy is back to growth, and BMO's customers and businesses continue to adapt. BMO saw double-digit commercial loan growth in both US and Canada, and it's also getting an advantage from its already-broad commercial presents, attracting new clients. BMO IR BMO has strong operations in the US - stronger than some American banks, with operations across the Midwest, the western coast, Texas, Florida, and others. These segments posted very promising results, and the bank is now #11 in commercial lending with a #3 deposit market share in core footprints, such as Chicago and Milwaukee. Growth is also strong here, and over 50% of the company's revenue comes from areas that are outside of the overall core footprint of the company's businesses. The M&A will accelerate NA growth, and the bank has already filed for regulatory approval, with expectations of $670M worth of cost synergies on a pre-tax basis. BMO IR The company's fundamentals remain extremely strong. An over 200-year history started back in 1817, and the 8th-largest bank in NA in terms of assets, serving 12 million customers on an annual basis means that this is one of the more significant Canadian banks to invest in. My stance towards the banks - BMO, Scotiabank (BNS), and CIBC (CM) as well as others is positive. I own shares in all of them, and I buy more when valuation allows for this. Again, like with my last article, very little fundamentally has changed for the bank. With recent M&As and consistently positive results, it's easy to see that BMO will be moving upward here, even if there are things to keep in mind. The M&A of BoTW adds an FV impact to the company's balance sheet but calculating these can be somewhat tricky given their relative sensitivity to overall interest rates. This will also impact the amount of goodwill, and therefore, company capital. Higher interest rates mean higher goodwill due to lower fair value of the fixed-rate assets, which will increase BMO's capital requirements. However, this is then balanced with ongoing customer deposit increase and commercial growth, which is solid and ongoing. As mentioned, impaired loans are back to near pre-pandemic levels. This is unchanged as well, with the overall bank loan portfolio being very high quality, and one of the best in the Canadian banking industry, with 45% consumer loans spread between mortgages, cards, and personal loans, and 55% government/business loans, with only very marginal (1%) exposures to Oil & Gas. The highest exposures here are financials, service industries, real estate, manufacturing, and other relatively conservative sectors. BMO has some interest rate sensitivity, meaning that a 100 bps interest rate increase results in a total $635M worth of Pre-Tax earnings (Canadian dollars). Term rates are already up, and reinvestment rates are up at the highest level in several years. The company's non-interest-related revenue rate is at the very least close to stable, and non-interest expenses are only up slightly, with the bank's efficiency ratio continuing to see very strong numbers despite the overall impacts. This is, among other things, related to lower employee costs. The company has yet further improved its CET-1 ratio, an important factor going into the current macro. BMO IR The aforementioned M&A is moving forward, and BMO will have to work more with regulators and community organizations to make sure that closing readiness is there, as well as finalize the integration plan. BMO currently expects the M&A to be finished by the end of 2022. All in all, 2Q22 was yet another positive milestone for BMO, and another quarter of positive growth, as evidenced by yet further dividend growth and continued positive expectations for the next few quarters. Let's look at how this impacts the valuation. Bank of Montreal Valuation We're moving into an environment where valuations for quality banks like BMO are falling. This provides us with buying opportunities of the highest order, both during and following a potential crash. We've seen plenty of decline thus far, and we might see more going forward. We're going to be using the Canadian ticker for BMO here, as it provides a bit more accuracy in terms of yield and historicals. All dollar amounts in the valuation segments are CAD. The bank is currently trading at a valuation below 9.6x. For a business that typically trades at 9.5-11x, that marks a decent amount of undervaluation, especially when considering that this bank is A+ rated. BMO Valuation (F.A.S.T Graphs) BMO is certainly attractive here. The company typically trades at average valuations of between 9.5-11X P/E, with a current P/E of 9.55x. Based on the exact 5-year average of 10.75X, this implies a slight upside to 2022E, and a larger upside to 2024E of close to 18% annualized, based on significant forecasted EPS growth on the back of the increased business volume and positive rate trends. As you can see, the upside is significantly higher than just 7-9% annually at this point in time. This is an A+ rated bank with a 4.3%+ yield. It is one of the lower yields in the Canadian banking sector, but it's also one of the safer banks in terms of portfolio diversification, US market exposure, and expected earnings growth during the next few years, as well as the historical accuracy of these growth numbers.
Bank of Montreal Pulls Back To Support, Attractive Valuation
A popular Canada stock ETF notched an all-time high in Q2 but quickly retreated into bear market territory. A massive rate hike by the BoC sent shockwaves across financial markets. BMO, a major Canadian bank, now sports an attractive price-to-book ratio with an interesting technical setup. Last week, the Bank of Canada (BoC) surprised investors by hiking its policy rate by a whopping full percentage point. At 2.5%, our friends north of the border now have a more restrictive interest rate policy versus the U.S. FOMC. Of course, the gap will collapse later this month when the Fed raises the Federal Funds rate by at least 0.75 percentage points on July 27. Unfortunately, Canadian stocks, as measured by the iShares MSCI Canada ETF (EWC) settled at a fresh 17-monthly low (on a weekly closing basis) on Friday. EWC is currently in a bear market, down more than 21% from its April all-time high. Canada had been an impressive area of relative strength during the first half of the year as many resource stocks, which are domiciled in the country, surged. That bullish trend quickly turned bearish as commodity prices collapsed and rates rose. Canada: From All-Time High to Bear Market StockCharts Turning to Canadian banks, according to BofA Global Research, Bank of Montreal (BMO) is the fourth largest Canadian bank by market cap and offers a wide array of financial services offerings across Canada and in the U.S. Midwest. BMO is more concentrated on commercial lending than its Canadian peers, with large C&I books in both Canada and the U.S. Recently, BMO has taken action to drive greater efficiency within Canadian banking, per BofA analysts. BMO should benefit from higher rates and still solid loan demand. Earnings growth is forecast to accelerate through 2024 according to both BofA and the Bloomberg consensus estimate. Its price-to-earnings ratio appears attractive, and BMO sports a yield well above that of the typical S&P 500 stock. BMO Earnings, Valuation, Dividend Yield Forecasts BofA Global Research BMO’s price-to-book ratio is also more attractive these days. It has fallen below the 10-year average—currently at just 1.3x. Buyers have stepped in around 1.2x book over the last decade aside from the plunge seen around the Covid crash. BMO Price-to-Book Ratio: Below the 10-Year Median Koyfin Charts Looking ahead, we will not get an earnings update until the end of August, according to Wall Street Horizon’s corporate event data. BMO Corporate Event Calendar: Earnings Aug 30 Wall Street Horizon The Technical Take I like what I see with the valuation and forecast earnings growth with BMO. And its dividend yield is a nice bonus. But what does the technical picture tell? I see interesting support right now based on a long-term upward trendline. Normally I don’t like to put too much emphasis on trendlines (that are upward or downward sloping) as I prefer horizontal lines since they better illustrate battleground areas between bulls and bears.
|BMO||US Banks||US Market|
Return vs Industry: BMO exceeded the US Banks industry which returned -10.9% over the past year.
Return vs Market: BMO exceeded the US Market which returned -10.2% over the past year.
|BMO Average Weekly Movement||3.6%|
|Banks Industry Average Movement||3.7%|
|Market Average Movement||7.7%|
|10% most volatile stocks in US Market||16.9%|
|10% least volatile stocks in US Market||3.2%|
Stable Share Price: BMO is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 4% a week.
Volatility Over Time: BMO's weekly volatility (4%) has been stable over the past year.
About the Company
Bank of Montreal provides diversified financial services primarily in North America. The company’s personal banking products and services include checking and savings accounts, credit cards, mortgages, and financial and investment advice services; and commercial banking products and services comprise business deposit accounts, commercial credit cards, business loans and commercial mortgages, cash management solutions, foreign exchange, specialized banking programs, treasury and payment solutions, and risk management products for small business and commercial banking customers. It also offers investment and wealth advisory services; digital investing services; financial services and solutions; and investment management, and trust and custody services.
Bank of Montreal Fundamentals Summary
|BMO fundamental statistics|
Is BMO overvalued?See Fair Value and valuation analysis
Earnings & Revenue
|BMO income statement (TTM)|
|Cost of Revenue||CA$0|
Last Reported Earnings
Apr 30, 2022
Next Earnings Date
Aug 30, 2022
|Earnings per share (EPS)||17.72|
|Net Profit Margin||37.93%|
How did BMO perform over the long term?See historical performance and comparison
4.2%Current Dividend Yield
Is BMO undervalued compared to its fair value, analyst forecasts and its price relative to the market?
Valuation Score 5/6
Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Key Valuation Metric
Which metric is best to use when looking at relative valuation for BMO?
Other financial metrics that can be useful for relative valuation.
|What is BMO's n/a Ratio?|
Price to Earnings Ratio vs Peers
How does BMO's PE Ratio compare to its peers?
|BMO PE Ratio vs Peers|
|Company||PE||Estimated Growth||Market Cap|
USB U.S. Bancorp
WFC Wells Fargo
BAC Bank of America
BMO Bank of Montreal
Price-To-Earnings vs Peers: BMO is good value based on its Price-To-Earnings Ratio (7.5x) compared to the peer average (9.9x).
Price to Earnings Ratio vs Industry
How does BMO's PE Ratio compare vs other companies in the US Banks Industry?
Price-To-Earnings vs Industry: BMO is good value based on its Price-To-Earnings Ratio (7.5x) compared to the US Banks industry average (10.1x)
Price to Earnings Ratio vs Fair Ratio
What is BMO's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.
|Current PE Ratio||7.5x|
|Fair PE Ratio||12.1x|
Price-To-Earnings vs Fair Ratio: BMO is good value based on its Price-To-Earnings Ratio (7.5x) compared to the estimated Fair Price-To-Earnings Ratio (12.1x).
Share Price vs Fair Value
What is the Fair Price of BMO when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.
Below Fair Value: BMO ($103.91) is trading below our estimate of fair value ($215.94)
Significantly Below Fair Value: BMO is trading below fair value by more than 20%.
Analyst Price Targets
What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?
Analyst Forecast: Target price is less than 20% higher than the current share price.
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How is Bank of Montreal forecast to perform in the next 1 to 3 years based on estimates from 10 analysts?
Future Growth Score1/6
Future Growth Score 1/6
Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Forecasted annual earnings growth
Earnings and Revenue Growth Forecasts
Analyst Future Growth Forecasts
Earnings vs Savings Rate: BMO's earnings are forecast to decline over the next 3 years (-6.8% per year).
Earnings vs Market: BMO's earnings are forecast to decline over the next 3 years (-6.8% per year).
High Growth Earnings: BMO's earnings are forecast to decline over the next 3 years.
Revenue vs Market: BMO's revenue (8.4% per year) is forecast to grow faster than the US market (7.9% per year).
High Growth Revenue: BMO's revenue (8.4% per year) is forecast to grow slower than 20% per year.
Earnings per Share Growth Forecasts
Future Return on Equity
Future ROE: BMO's Return on Equity is forecast to be low in 3 years time (15.4%).
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How has Bank of Montreal performed over the past 5 years?
Past Performance Score5/6
Past Performance Score 5/6
Growing Profit Margin
Earnings vs Industry
Historical annual earnings growth
Earnings and Revenue History
Quality Earnings: BMO has high quality earnings.
Growing Profit Margin: BMO's current net profit margins (37.9%) are higher than last year (23.5%).
Past Earnings Growth Analysis
Earnings Trend: BMO's earnings have grown by 11.6% per year over the past 5 years.
Accelerating Growth: BMO's earnings growth over the past year (102.1%) exceeds its 5-year average (11.6% per year).
Earnings vs Industry: BMO earnings growth over the past year (102.1%) exceeded the Banks industry 8.8%.
Return on Equity
High ROE: BMO's Return on Equity (18.5%) is considered low.
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How is Bank of Montreal's financial position? (This company is analysed differently as a bank or financial institution)
Financial Health Score6/6
Financial Health Score 6/6
Allowance for Bad Loans
Low Risk Liabilities
Low Risk Deposits
Level of Bad Loans
Financial Position Analysis
Debt to Equity History and Analysis
Financial Institutions Analysis
Asset Level: BMO's Assets to Equity ratio (15.9x) is moderate.
Allowance for Bad Loans: BMO has a sufficient allowance for bad loans (113%).
Low Risk Liabilities: 73% of BMO's liabilities are made up of primarily low risk sources of funding.
Loan Level: BMO has an appropriate level of Loans to Assets ratio (48%).
Low Risk Deposits: BMO's Loans to Deposits ratio (70%) is appropriate.
Level of Bad Loans: BMO has an appropriate level of bad loans (0.4%).
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What is Bank of Montreal current dividend yield, its reliability and sustainability?
Dividend Score 6/6
Future Dividend Coverage
Current Dividend Yield
Dividend Yield vs Market
Notable Dividend: BMO's dividend (4.19%) is higher than the bottom 25% of dividend payers in the US market (1.47%).
High Dividend: BMO's dividend (4.19%) is in the top 25% of dividend payers in the US market (3.95%)
Stability and Growth of Payments
Stable Dividend: BMO's dividends per share have been stable in the past 10 years.
Growing Dividend: BMO's dividend payments have increased over the past 10 years.
Current Payout to Shareholders
Earnings Coverage: With its reasonably low payout ratio (26.1%), BMO's dividend payments are well covered by earnings.
Future Payout to Shareholders
Future Dividend Coverage: BMO's dividends in 3 years are forecast to be well covered by earnings (39.9% payout ratio).
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How experienced are the management team and are they aligned to shareholders interests?
Average management tenure
William White (50 yo)
Mr. William Darryl White is Chief Executive Officer of Bank of Montreal in November 1, 2017. He serves as a Director of Bank of Montreal since May 24, 2017, as well as its U.S. subsidiary, BMO Financial Co...
CEO Compensation Analysis
Compensation vs Market: William's total compensation ($USD11.63M) is about average for companies of similar size in the US market ($USD12.88M).
Compensation vs Earnings: William's compensation has increased by more than 20% in the past year.
Experienced Management: BMO's management team is considered experienced (3.5 years average tenure).
Experienced Board: BMO's board of directors are considered experienced (7.4 years average tenure).
Who are the major shareholders and have insiders been buying or selling?
Insider Trading Volume
Insider Buying: BMO insiders have bought more shares than they have sold in the past 3 months.
Recent Insider Transactions
Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 3.7%.
Bank of Montreal's employee growth, exchange listings and data sources
- Name: Bank of Montreal
- Ticker: BMO
- Exchange: NYSE
- Founded: 1817
- Industry: Diversified Banks
- Sector: Banks
- Implied Market Cap: CA$89.100b
- Listing Market Cap: CA$69.635b
- Shares outstanding: 671.44m
- Website: https://www.bmo.com
Number of Employees
- Bank of Montreal
- 129 rue Saint Jacques
- H2Y 1L6
Company Analysis and Financial Data Status
|Data||Last Updated (UTC time)|
|Company Analysis||2022/08/14 00:00|
|End of Day Share Price||2022/08/12 00:00|
Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.