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Bank Of Montreal (BMO)
:BMO
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Bank Of Montreal
(NYSE:BMO)
77Outperform
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
Total revenues increased by 18% while expenses grew by only 9.2%, leading to a substantial growth in pre-tax pre-provision profits.
Negative Factors
Guidance
Guidance somewhat cautious despite a strong Q4.
Investor Confidence
Need to regain investor confidence after Q4/24 results.
Bank Of Montreal (BMO) vs. S&P 500 (SPY)
Market Cap
$65.07B
Dividend Yield5.04%
Average Volume (3M)666.46K
Price to Earnings (P/E)11.6
Beta (1Y)0.91
Revenue Growth15.63%
EPS Growth66.95%
CountryUS
Employees53,597
SectorFinancial
Sector Strength78
IndustryBanks - Diversified
Share Statistics
EPS (TTM)7.71
Shares Outstanding728,763,550
10 Day Avg. Volume650,416
30 Day Avg. Volume666,461
Financial Highlights & Ratios
PEG Ratio0.25
Price to Book (P/B)N/A
Price to Sales (P/S)3.62
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
$108.94Price Target Upside22.12% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering12
Bank Of Montreal Business Overview & Revenue Model
Company DescriptionBank 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. In addition, the company provides life insurance, accident and sickness insurance, and annuity products; creditor and travel insurance to bank customers; and reinsurance solutions. Further, it offers client's debt and equity capital-raising services, as well as loan origination and syndication, and treasury management; strategic advice on mergers and acquisitions, restructurings, and recapitalizations, as well as valuation and fairness opinions; and trade finance, risk mitigation, and other operating services. Additionally, the company provides research and access to markets for institutional, corporate, and retail clients; trading solutions that include debt, foreign exchange, interest rate, credit, equity, securitization and commodities; new product development and origination services, as well as risk management advice and services to hedge against fluctuations; and funding and liquidity management services to its clients. It operates through approximately 900 bank branches and 3,300 automated banking machines in Canada and the United States. Bank of Montreal was founded in 1817 and is headquartered in Montreal, Canada.
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 | ||||
| 40.61B | 113.53B | 114.31B | 118.21B | 121.97B | 95.24B | Total Assets |
| 411.64B | 1.41T | 1.29T | 1.14T | 988.17B | 949.26B | Total Debt |
| 3.78B | 262.44B | 248.74B | 222.64B | 189.81B | 187.01B | Net Debt |
| -16.78B | 193.70B | 166.69B | 129.44B | 88.24B | 120.57B | Total Liabilities |
| 389.76B | 1.33T | 1.22T | 1.07T | 930.65B | 892.67B | Stockholders Equity |
| 21.88B | 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
Negative
89.21
Price Trends
98.68
Negative
97.25
Negative
91.09
Negative
Market Momentum
-0.80
Positive
44.39
Neutral
31.95
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BMO, the sentiment is Negative. The current price of 89.21 is below the 20-day moving average (MA) of 96.51, below the 50-day MA of 98.68, and below the 200-day MA of 91.09, indicating a bearish trend. The MACD of -0.80 indicates Positive momentum. The RSI at 44.39 is Neutral, neither overbought nor oversold. The STOCH value of 31.95 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for BMO.
Bank Of Montreal Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Performance Comparison
BMO
Bank Of Montreal
89.21
-4.23
-4.53%
BNS
Bank Of Nova Scotia
46.73
-0.69
-1.46%
CM
Canadian Bank of Commerce
56.66
8.78
18.34%
RY
Royal Bank Of Canada
110.91
11.52
11.59%
TD
Toronto Dominion Bank
57.04
0.51
0.90%
NTIOF
National Bank of Canada
79.65
-0.76
-0.95%
Bank Of Montreal Earnings Call Summary
Earnings Call Date: Feb 25, 2025 | % Change Since: -10.59% | 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.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.