BMO reiterates the Outperform on BCE(BCE:TSX)

STA Research
by: STA Research

BMO Capital Markets reiterated the $32 target and Outperform rating on the company’s stock.

Our view of the stock is Slightly Bearish with a score of 4.1 out of 10, where 0 is very bearish and 10 very bullish.

What to like:

Superior risk adjusted returns This stock has performed well, on a risk adjusted basis, compared to its sector peers(for a hold period of at least 12 months) and is in the top quartile. Low volatility The stock’s annual returns have been stable and consistent compared to its sector peers(for a hold period of at least 12 months) and is in the top quartile. Although stability is good, also keep in mind it can limit returns. Superior total returns The stock has outperformed its sector peers on average annual total returns basis in the past 5 years (for a hold period of at least 12 months) and is in the top quartile. Positive cash flow The company had positive total cash flow in the most recent four quarters. Positive free cash flow The company had positive total free cash flow in the most recent four quarters. Superior Revenue Growth This stock has shown top quartile revenue growth in the previous 5 years compared to its sector. High Gross Profit to Asset Ratio This stock is in the top quartile compared to its peers on Gross Profit to Asset Ratio. This is a popular measure among value investors for showing superior returns in the long run.

What to not like:

Low market capitalization This is among the smaller entities in its sectors with below median market capitalization. That may make it less stable in the long run unless it has a unique technology or market which can help it grow or get acquired in future. Below median dividend returns The company’s average income yield over the past 5 years has been low compared to its peers. However, it is not a problem if you are not looking for income. Overpriced compared to earnings The stock is trading high compared to its peers on a price to earning basis and is above the sector median. Overpriced on cashflow basis The stock is trading high compared to its peers on a price to cash flow basis. It is priced above the median for its sectors. Proceed with caution if you are considering to buy. Poor return on equity The company management has delivered below median return on equity in the most recent 4 quarters compared to its peers. Poor capital utilization The company management has delivered below median return on invested capital in the most recent 4 quarters compared to its peers. Poor return on assets The company management has delivered below median return on assets in the most recent 4 quarters compared to its peers. Highly leveraged The company is in the bottom half compared to its sector peers on debt to equity and is highly leveraged. However, do check the news and look at its sector and management statements. Sometimes this is high because the company is trying to grow aggressively. We recommend seeking a licensed professional for investment advice. Low Earnings Growth This stock has shown below median earnings growth in the previous 5 years compared to its sector Low Dividend Growth This stock has shown below median dividend growth in the previous 5 years compared to its sector.

 

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