Fact based stock research
Bank of Montreal (TSX:BMO)

CA0636711016

How to read the ranks

For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".

Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".

Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.

Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.

(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).

(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.

Bank of Montreal stock research in summary

bmo.com

ANALYSIS: With an Obermatt Combined Rank of 42 (worse than 58% compared with investment alternatives), Bank of Montreal (Diversified Banks, Canada) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Bank of Montreal are low in value (priced high) with a consolidated Value Rank of 40 (worse than 60% of alternatives) and show below-average growth (Growth Rank of 25) but are safely financed (Safety Rank of 73), which means low debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 42, is a hold recommendation based on Bank of Montreal's financial characteristics. As the company Bank of Montreal's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 40) and low growth (Obermatt Growth Rank of 25), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. In this case, good financing practices (Obermatt Safety Rank of 73) are a positive sign, because it may allow the company to weather challenging times until the hoped-for cash flows materialize. This may be true for high-tech or biotechnology companies with enough cash to sustain prolonged business development. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and unattractive today. In such cases, the Obermatt Method has limited value, as it is based on facts we can observe today. If the facts lie all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that account for a small fraction of a safe portfolio. Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more

Latest Obermatt Ranks


360° View^new
Sentiment Rank^new
Value Rank	40
Growth Rank	25
Safety Rank	73
Combined Rank	42

Country	Canada
Industry	Diversified Banks
Index	Human Rights, TSX Composite
Size class	XX-Large

18-Apr-2024. Stock data may be delayed. Log in or sign up to get the most recent research.

Further information

Multiple opinions. One number.

Analysts rarely agree on a stock’s future. So, who do you believe? Obermatt translates those collective views into a single Sentiment Rank. That plus the financial ranks give you the ultimate 360° View. Sign up to access them.

Why popular stocks have low ratings

It’s easier said than done. When your stock drops, it’s easy to want to sell it and find a better performer. Think twice, or even three times, before trading. Those fees (especially the hidden ones) can eat up your gains.

Review the performance ranks of the individual metrics that form each investment strategy.

Research History: Bank of Montreal

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	28	91	71	40
GROWTH
GROWTH	96	83	76	25
SAFETY
SAFETY	94	55	33	73
SENTIMENT
SENTIMENT	n/a	76	35	^new
360° VIEW
360° VIEW	n/a	100	63	^new

Most recent update of the stock research: 18-Apr-2024. Financial reporting date used for calculating ranks: 31-Dec-2023. Stock research history is based on the Obermatt Method. The higher the rank, the better Bank of Montreal is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	28	91	71	40
GROWTH
GROWTH	96	83	76	25
SAFETY
SAFETY	94	55	33	73
COMBINED
COMBINED	87	100	71	42

Last update of combined financial performance: 18-Apr-2024. Stock analysis on combined financial performance: The higher the rank of Bank of Montreal the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 40 (worse than 60% compared with alternatives), Bank of Montreal shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with three out of four indicators below average for Bank of Montreal. Only the metric dividend yield has an above-average rank, reflecting that dividend practices are expected to be higher than 82% of comparable companies, making the stock an attractive buy for dividend investors. However, dividend investors may get disappointed because all other critical financial indicators are below the market median: Price-to-Sales is 49 which means that the stock price compared with what market professionals expect for future profits is higher than 51% of comparable companies, indicating a low value concerning Bank of Montreal's sales levels. The same is valid for Price-to-Profit (also referred to as price-earnings, P/E) with a rank of 40 which means that the stock price compared with what market professionals expect for future profit levels is higher than 60% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a Price-to-Book Rank of 17 is also low. Compared with invested capital, the stock price is higher than for 83% of comparable investments. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 40, is a hold recommendation based on Bank of Montreal's stock price compared with the company's operational size and dividend yields. Should dividend investors pick Bank of Montreal? The company-reported financials speak against it. The company is expensive compared with revenue and invested capital levels, two reliable company size indicators. In addition, it currently has a low level of profits. How can future dividends be paid in the case that profits remain low? Dividend investors should choose Bank of Montreal only if they reasonably expect the low current profit levels to be transitory. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision, which is essential in this case, as the financial indicators are inconclusive. ...read more

VALUE METRICS	2021	2022	2023	2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	36	77	67	49
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	32	85	71	40
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	22	30	38	17
DIVIDEND YIELD
DIVIDEND YIELD	58	95	87	82
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	28	91	71	40

Last update of Value Rank: 18-Apr-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of Bank of Montreal; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 25 (better than 25% compared with alternatives), Bank of Montreal shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four indicators below-average for Bank of Montreal. While Sales Growth ranks at 54, professionals currently expect the company to grow more than 54% of its competitors, while all other growth ranks are below the market median. Profit Growth has a rank of 48, which means that, currently, professionals expect the company to grow its profits less than 52% of its competitors, and Capital Growth has a low rank of 31. Historic stock returns were also below average with a current Stock Returns rank of 41 which means that the stock returns have recently been below 59% of alternative investments. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 25, is a hold recommendation for growth and momentum investors. If revenues are expected to increase, but all other growth indicators are negative, the company may be investing in future growth through means not visible in the balance sheet and thus not reflected in capital growth. The fact that Stock Returns have been below market doesn't mean that much, as it may be due to overly optimistic investor behavior in the past, which has been corrected to a more reasonable level recently. If that were the case, a positive Value Rank would be a reason to invest because the company is still expected to grow, while stock prices are now at a more reasonable level. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case, especially since the growth performance isn't stellar here. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	66	70	78	54
PROFIT GROWTH
PROFIT GROWTH	45	16	66	48
CAPITAL GROWTH
CAPITAL GROWTH	n/a	73	58	31
STOCK RETURNS
STOCK RETURNS	86	87	67	41
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	96	83	76	25

Last update of Growth Rank: 18-Apr-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of Bank of Montreal.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 73 (better than 73% compared with alternatives), the company Bank of Montreal has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Bank of Montreal is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above-average for Bank of Montreal. Refinancing is at 93, meaning the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 93% of its competitors. Liquidity is also good at 74, meaning the company generates more profit to service its debt than 74% of its competitors. This indicates that the company is safer when it comes to debt service. However, Leverage is rather large at 14, which means the company has an above-average debt-to-equity ratio. It has more debt than 86% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 73 (better than 73% compared with alternatives), Bank of Montreal has a financing structure that is safer than that of its competitors. This is not bad if things go well. The higher debt level means better returns to shareholders if things go well. Many top-performing companies operate with higher debt levels, and Bank of Montreal could be in that group. But if you expect the environment to turn rougher, the higher leverage could become a problem. The same is valid if you expect interest rates to rise. That could squeeze shareholder returns, which so far have benefitted from better conditions. In the long-term, investors may have a debt challenge with Bank of Montreal and should also compare Obermatt’s Value, Growth, and Sentiment Ranks before making a decision. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	96	12	12	14
REFINANCING
REFINANCING	64	53	62	93
LIQUIDITY
LIQUIDITY	74	92	56	74
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	94	55	33	73

Last update of Safety Rank: 18-Apr-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of Bank of Montreal and the more cash is available to service its debt.

Sentiment Metrics in Detail

SENTIMENT	2021	2022	2023	2024
ANALYST OPINIONS
ANALYST OPINIONS	n/a	57	67	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	16	4	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	70	21	^new
MARKET PULSE
MARKET PULSE	n/a	86	60	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	76	35	^new

Last update of Sentiment Rank: 18-Apr-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for Bank of Montreal.
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