Bank Of Montreal /Can/ (NYSE: BMO)

Sector: Financial Services Industry: Banks - Diversified CIK: 0000927971
Market Cap 107.49 Bn
P/B 1.71
P/E 17.28
P/S 4.15
ROIC (Qtr) 3.66
Div Yield % 2.43
Rev 1y % (Qtr) 2.80
Total Debt (Qtr) 179.01 Bn
Debt/Equity (Qtr) 2.85
Add ratio to table...

About

Investment thesis

Bull case

  • Strong tangible asset base of 1039.46B provides 5.81x coverage of total debt 179.01B, indicating robust asset backing and low credit risk.
  • Operating cash flow of 7.31B provides exceptional 640x coverage of minority interest expenses 11.43M, showing strong core operations.
  • Robust free cash flow of 6.08B exceeds capital expenditure of 1.24B by 4.92x, indicating strong organic growth funding capability.
  • Cash position of 50.23B provides exceptional 4395.12x coverage of minority interest expenses 11.43M, indicating strong liquidity.
  • Retained earnings of 33.84B represent substantial 0.54x of equity 62.89B, indicating strong internal capital generation.

Bear case

  • Operating cash flow of 7.31B provides thin coverage of dividend payments of (3.59B) with a -2.04 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of 6.08B represents just -26.51x of debt issuance (229.29M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Operating cash flow of 7.31B is outpaced by equity issuance of (2.31B) (-3.16 ratio), indicating concerning reliance on equity markets for funding operations.
  • R&D investment of 0 represents just 0x of SG&A expenses of 12.84B, indicating potential underinvestment in innovation relative to administrative overhead.
  • Deposit liabilities of 697.29B significantly exceed cash reserves of 50.23B, which is 13.88x, indicating potential liquidity risk in stress scenarios.

Peer comparison

Companies in the Banks - Diversified
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 JPM Jpmorgan Chase & Co 1,043.32 Bn 33.97 9.59 942.38 Bn
2 BAC Bank Of America Corp /De/ 532.79 Bn 28.35 6.13 708.27 Bn
3 WFC Wells Fargo & Company/Mn 446.49 Bn 124.86 10.43 408.42 Bn
4 C Citigroup Inc 376.35 Bn 51.48 4.87 720.33 Bn
5 RY Royal Bank Of Canada 244.65 Bn 16.82 5.14 9.97 Bn
6 TD Toronto Dominion Bank 165.03 Bn 11.57 3.41 7.67 Bn
7 BK Bank of New York Mellon Corp 143.13 Bn 63.87 9.95 51.52 Bn
8 BMO Bank Of Montreal /Can/ 107.49 Bn 17.28 4.15 179.01 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.16 0.22
EV to Cash from Ops. EV/CFO 23.61 241.80
EV to Debt EV to Debt 0.96 2.53
EV to EBIT EV/EBIT 20.96 33.73
EV to EBITDA EV/EBITDA 17.61 25.98
EV to Free Cash Flow [EV/FCF] EV/FCF 28.41 245.05
EV to Market Cap EV to Market Cap 1.61 1.98
EV to Revenue EV/Rev 6.67 9.02
Price to Book Value [P/B] P/B 1.71 3.87
Price to Earnings [P/E] P/E 17.28 33.57
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.24 2.37
Dividend Payout Ratio % Div Payout % (Qtr) 42.00 29.28
Dividend per Basic Share Div per Share (Qtr) 3.44 2.04
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 28.92 15.72
Interest Coverage Interest Coverage 0.00 0.00
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -8.97 -5.81
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 0.84 -8.06
Dividend Growth (1y) % Div 1y % (Qtr) -40.06 -10.21
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 17.31 32.26
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 16.22 22.90
EBIT Growth (1y) % EBIT 1y % (Qtr) 19.35 30.58
EBT Growth (1y) % EBT 1y % (Qtr) 19.35 30.58
EPS Growth (1y) % EPS 1y % (Qtr) 18.66 38.83
FCF Growth (1y) % FCF 1y % (Qtr) -66.63 235.05
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 9.03 9.67
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.02 0.03
Cash Payout Ratio Cash Payout (Qtr) 0.42 0.17
Cash Ratio Cash Ratio 0.00 0.00
Current Ratio Current Ratio 0.00 0.00
Debt to Equity Ratio Debt/Equity (Qtr) 2.85 3.24
Interest Cover Ratio Interest Cover Ratio 0.00 0.00
Times Interest Earned Times Interest Earned 0.00 0.00
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 37.80 38.15
EBIT Margin % EBIT Margin % (Qtr) 44.52 38.03
EBT Margin % EBT Margin % (Qtr) 31.80 33.01
Gross Margin % Gross Margin % (Qtr) 100.00 98.96
Net Profit Margin % Net Margin % (Qtr) 24.00 26.44