It was a rough morning for the Bank of Montreal (TSE:BMO) (NYSE:BMO), which posted earnings results that disappointed just about everybody. Particularly frustrated were the investors, who pulled out in large numbers and took over 7% of the Canadian bank’s market cap with them in Wednesday morning’s trading.
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Its earnings per share came in at C$2.59 per share, but analysts were looking for C$2.77 per share. In addition, adjusted net income dropped from C$2.19 billion this time last year to just C$2.03 billion now. One major reason for that difference was loan loss provisions; the Bank of Montreal set aside C$705 million to cover potential bad loans, but analysts were only looking for it to set aside C$563.3 million.
Higher interest rates brought in some extra revenue, but that also hurt loan issuance rates. Rate cuts are still expected to start up this summer, though the U.S. likely won’t see cuts until this fall.
Bank of Montreal Hikes Its Dividend
Bank of Montreal hiked its dividend to $1.55 per share per quarter, which is up $0.04 per share from the previous dividend. Good news for income investors who were looking for a way to try and beat inflation, though probably not enough to beat that inflation by itself.
Is Bank of Montreal a Good Stock to Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on BMO stock based on six Buys and one Hold assigned in the past three months, as indicated by the graphic below. After a 12.11% rally in its share price over the past year, the average BMO price target of C$136.01 per share implies 11.74% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
