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Bank Of Montreal (TSE:BMO)
TSX:BMO
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Bank Of Montreal
(TSX:BMO)
71Outperform
Positive Factors
Earnings
BMO reported a significant Q1 earnings beat, combining better-than-expected credit with strong revenue growth across all its business lines.
Financial Performance
A robust capital position and significant accretion point to further buyback activity, suggesting strong financial health and potential for increased shareholder value.
Negative Factors
Investor Confidence
Need to regain investor confidence after Q4/24 results.
Bank Of Montreal (BMO) vs. S&P 500 (SPY)
Market Cap
$101.60B
Dividend Yield4.64%
Average Volume (3M)3.23M
Price to Earnings (P/E)13.1
Beta (1Y)1.26
Revenue Growth10.57%
EPS Growth50.35%
CountryCA
Employees54,000
SectorFinancial
Sector Strength81
IndustryBanking
Share Statistics
EPS (TTM)10.63
Shares Outstanding728,763,550
10 Day Avg. Volume2,782,294
30 Day Avg. Volume3,228,856
Financial Highlights & Ratios
PEG Ratio0.26
Price to Book (P/B)N/A
Price to Sales (P/S)3.64
Price to Cash Flow (P/CF)5.40
P/FCF Ratio2.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$156.01Price Target Upside13.86% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering12
Bank Of Montreal Business Overview & Revenue Model
Company DescriptionBank of Montreal is a Canadian multinational bank and financial services company. It provides personal and commercial banking, lending, mortgages, credit cards and investment advice services. The company also offers specialized banking programs, treasury and payment solutions, risk management products, foreign exchange and cash management solutions to small business and commercial banking customers.
How the Company Makes MoneyBank of Montreal generates revenue through multiple key streams. Primarily, it earns money from net interest income, which is the difference between the interest earned on loans and mortgages and the interest paid on customer deposits. Another significant source of revenue is non-interest income, including fees and commissions from wealth management services, investment banking activities, and transaction processing fees from credit and debit card services. BMO also benefits from trading and investment gains. Additionally, partnerships with other financial institutions and corporations facilitate cross-selling opportunities and enhance BMO's product offerings, further contributing to its earnings.
Bank Of Montreal Financial Statement Overview
Summary
BMO shows strong financial health with a significant revenue increase and robust net profit margin. However, high leverage and moderate EBIT margin suggest room for improvement in operational efficiency.Income Statement
The income statement shows a solid performance with a significant increase in total revenue from the previous year by 38.24% (TTM). The gross profit margin is robust, indicating efficient cost management. However, the EBIT margin is moderate at 6.96%, suggesting room for improvement in operational efficiency. The net profit margin is healthy at 18.42%, highlighting profitability.75
Positive
Balance Sheet
The balance sheet reflects a stable financial position with a debt-to-equity ratio of 3.13, which is typical for the banking industry but indicates high leverage. The equity ratio is 5.96%, suggesting a conservative level of equity financing. Return on Equity is a strong 9.32%, affirming effective use of shareholders' funds.70
Positive
Cash Flow
The cash flow statement shows a decline in free cash flow growth rate compared to previous periods, indicating potential challenges in generating cash. The operating cash flow to net income ratio is 2.15, suggesting effective conversion of income to cash. However, the free cash flow to net income ratio of 1.96 indicates less cash available after capital expenditures.68
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 44.31B | 32.04B | 29.02B | 26.26B | 26.91B | 25.02B | Gross Profit |
| 45.22B | 32.04B | 33.05B | 26.26B | 26.91B | 25.02B | EBIT |
| 3.08B | 0.00 | 10.30B | 28.90B | 10.26B | 6.35B | EBITDA |
| 2.92B | 0.00 | 7.71B | 19.00B | 11.44B | 7.61B | Net Income Common Stockholders |
| 8.16B | 7.32B | 4.37B | 13.54B | 7.75B | 5.10B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 180.06B | 113.53B | 114.31B | 118.21B | 121.97B | 95.24B | Total Assets |
| 1.47T | 1.41T | 1.29T | 1.14T | 988.17B | 949.26B | Total Debt |
| 274.34B | 262.44B | 248.74B | 222.64B | 189.81B | 187.01B | Net Debt |
| 194.54B | 193.70B | 166.69B | 129.44B | 88.24B | 120.57B | Total Liabilities |
| 1.38T | 1.33T | 1.22T | 1.07T | 930.65B | 892.67B | Stockholders Equity |
| 87.56B | 84.25B | 77.01B | 71.04B | 57.52B | 56.59B |
| Cash Flow | Free Cash Flow | ||||
| 16.02B | 27.47B | 7.91B | 3.51B | 43.07B | 49.80B | Operating Cash Flow |
| 17.57B | 29.03B | 9.59B | 4.96B | 44.05B | 50.84B | Investing Cash Flow |
| -31.52B | -24.53B | -21.16B | -29.47B | -299.00M | -31.97B | Financing Cash Flow |
| 7.31B | -17.41B | 268.00M | 15.98B | -5.12B | -10.30B |
Bank Of Montreal Technical Analysis
Neutral
137.02
Price Trends
142.03
Negative
137.16
Negative
125.88
Positive
Market Momentum
-0.92
Positive
36.64
Neutral
6.05
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:BMO, the sentiment is Neutral. The current price of 137.02 is below the 20-day moving average (MA) of 143.42, below the 50-day MA of 142.03, and above the 200-day MA of 125.88, indicating a neutral trend. The MACD of -0.92 indicates Positive momentum. The RSI at 36.64 is Neutral, neither overbought nor oversold. The STOCH value of 6.05 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:BMO.
Bank Of Montreal Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Performance Comparison
TSE:BMO
Bank Of Montreal
137.02
15.86
13.09%
BNS
Bank Of Nova Scotia
47.21
0.34
0.73%
CM
Canadian Bank of Commerce
55.05
8.13
17.33%
RY
Royal Bank Of Canada
108.81
13.00
13.57%
TD
Toronto Dominion Bank
57.67
0.63
1.10%
NTIOF
National Bank of Canada
79.76
1.25
1.59%
Bank Of Montreal Earnings Call Summary
Earnings Call Date: Feb 25, 2025 | % Change Since: -3.74% | Next Earnings Date: May 28, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong financial performance with significant growth in several business segments and advancements in technology. However, challenges such as higher credit loss provisions and potential tariff impacts create uncertainties. Positive elements slightly outweigh the negative ones.Highlights
Strong Start to Fiscal Year
First quarter adjusted net income of $2.3 billion and earnings per share of $3.04. Pre-provision pretax earnings increased 32% from last year, with revenue growth up 18%.
Positive Operating Leverage and Efficiency
Operating leverage of 8.9% and an improved efficiency ratio to 56.3%. CET1 ratio remained strong at 13.6%.
Canadian P&C Record Revenue
Canadian P&C reported record revenues of $3 billion, driven by customer and balance sheet growth.
Wealth Management Performance
BMO Wealth Management PPPT was up 48% with strong revenue growth in wealth and asset management.
Capital Markets Growth
BMO Capital Markets grew PPPT by 67%, driven by strong Global Markets trading performance.
Digital and Technological Advancements
Joined the IBM Quantum Network to develop and deploy quantum-powered solutions.
Lowlights
Higher Credit Loss Provisions
Provisions for credit losses were $1 billion, reflecting higher delinquencies in credit cards and other unsecured personal loans.
Trade and Tariff Uncertainties
Uncertainty around potential tariffs between the U.S. and Canada impacting client sentiment and economic outlook.
U.S. P&C Loan Growth Challenges
Loan growth remains subdued in U.S. Commercial Banking, with higher PCLs affecting net income.
Impact of Wildfires in California
Significant impact on individuals and businesses due to wildfires, with BMO pledging $3 million for relief efforts.
Company Guidance
During BMO Financial Group's Q1 2025 earnings call, the company reported strong financial performance with an adjusted net income of $2.3 billion and earnings per share of $3.04. Pre-provision pretax earnings increased by 32% to $4 billion, and revenue grew by 18%, resulting in positive operating leverage of 8.9%. The CET1 ratio remained robust at 13.6%, facilitating organic growth, investment, and capital return to shareholders. The bank executed a share buyback program, repurchasing 3.2 million shares in total. Notably, Canadian Personal & Commercial Banking saw record revenues of $3 billion, while BMO Capital Markets experienced a 67% increase in pre-provision pretax earnings. The bank's return on equity rose to 11.3%, with a medium-term target of 15%. The economic outlook is uncertain due to potential U.S.-Canada tariffs, impacting client capital deployment. Despite this, BMO remains confident in its diversified business model and strategic initiatives aimed at achieving sustainable growth and improved returns.Bank Of Montreal Corporate Events
Stock BuybackDividendsFinancial Disclosures
BMO Financial Group Reports Strong Q1 2025 Results with Increased Dividend
Positive
Feb 25, 2025
BMO Financial Group reported strong financial results for the first quarter of 2025, with a significant increase in net income and earnings per share compared to the previous year. The company demonstrated positive operating leverage across its operating groups, supported by broad-based revenue growth and a decline in provisions for credit losses. BMO also announced a 5% increase in its quarterly dividend and initiated a share buyback program, reflecting its solid financial position and commitment to returning value to shareholders.
Dividends
BMO Declares Stable Dividends for Q2 2025
Positive
Feb 25, 2025
Bank of Montreal has announced that its Board of Directors declared a quarterly dividend of $1.59 per share on its common shares for the second quarter of fiscal year 2025, maintaining the same level as the previous quarter. Additionally, dividends were declared on several series of Class B Preferred Shares. These dividends are designated as ‘eligible’ for Canadian tax purposes, and shareholders have the option to reinvest their dividends through the bank’s Shareholder Dividend Reinvestment and Share Purchase Plan. This announcement reflects BMO’s stable financial performance and commitment to providing consistent returns to its shareholders.
Bank of Montreal Gets Green Light for Share Repurchase Plan
Jan 17, 2025
Bank of Montreal has received regulatory approval to initiate a normal course issuer bid, allowing the bank to repurchase up to 20 million of its common shares, which constitute approximately 2.7% of its public float. This move is part of the bank’s strategic capital management efforts, aiming to optimize its capital structure and deliver value to shareholders, reflecting the bank’s robust market position and financial stability.
Bank of Montreal Launches Share Repurchase Plan
Jan 10, 2025
Bank of Montreal has initiated an automatic securities purchase plan with BMO Nesbitt Burns Inc. to repurchase up to 20 million of its common shares as part of its normal course issuer bid, after receiving necessary regulatory approvals. This move aims to optimize its capital structure and demonstrate confidence in its financial stability, with decisions on the number and timing of share repurchases being influenced by market conditions.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.