Bank of Montreal (BMO), the diversified Canadian personal and commercial bank, is doing something some of its peers are not: actually making money. BMO is trading with a forward P/E of 11.34.
Company Description
Bank of Montreal is a diversified Canadian bank. Established in 1817, it provides personal, commercial and corporate banking services in North America.
Bank of Montreal Surprised on Second-Quarter Estimates
On May 26, Bank of Montreal reported fiscal second quarter 2009 results which beat analysts’ estimates by 12.68%. It was the second consecutive surprise on estimates and came amidst a difficult operating environment for financial companies.
Adjusted earnings per share were 80 cents compared to analysts’ estimates of 71 cents. Net income fell to $358 million from $642 million in the year ago period.
The company’s P&C Canada segment, its personal and commercial banking unit, grew revenue 8%. Its loans are up year over year as it focused on customer service.
The BMO Capital Markets segment saw revenue increase 17% over the year ago period. The wealth management segment saw deposits climb but because of the poor performance of worldwide stock markets, the levels under management and administered assets both dropped.
Despite all the positive results in the quarter, Bank of Montreal is still in an industry that is among the most precarious during this global recession. Credit loss provisions increased $221 million from a year ago to $372 million. $245 million were in the United States and were due to U.S. personal and commercial business loans.
Dividend is Unchanged
Unlike many of its peers, Bank of Montreal continues to pay a juicy dividend. Its third quarter dividend was 70 cents per share, or $2.80 per share for the year. It has a current yield of 5.40%.
Consensus Estimates for 2009 Rise
Analysts are mixed on the third quarter as compared to full year estimates. Third quarter estimates have fallen 3 cents to 88 cents in the last 30 days.
However, covering analysts are more bullish on the full year with consensus estimates jumping 20 cents to $3.72 per share in the last month. 1 out of 5 analysts has raised during that period.
Value Fundamentals
Bank of Montreal is a Zacks #1 Rank (strong buy) stock. It is trading with a forward P/E of 11.34 and a price-to-book of 1.45. The company has a stellar average 5-year return on equity (ROE) of 17.40%.
