Morningstar Upgrades Bank of Montreal (BMO:TSX) to a Buy rating

by: Gillian Lawrence
Bank of Montreal

Canaccord Capital maintains Bank of Montreal with an Outperform rating and lowers the target price to $150.50 from $152.50 on the company’s stock.

Morningstar Upgrades Bank of Montreal to a Buy rating and lowers the target price to $146 from $148.

Based on the Bank of Montreal stock forecasts from 12 analysts, the average analyst target price for Bank of Montreal is CAD 146.50 over the next 12 months. Bank of Montreal’s average analyst rating is Strong Buy. Stock Target Advisor’s own stock analysis of Bank of Montreal is Slightly Bullish , which is based on 6 positive signals and 5 negative signals. At the last closing, Bank of Montreal’s stock price was CAD 124.49Bank of Montreal’s stock price has changed by -5.08% over the past week, -2.48% over the past month and -1.13% over the last year.

What we 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.

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.

High dividend returns

The stock has outperformed its sector peers on average annual dividend returns basis in the past 5 years (for a hold period of at least 12 months) and is in the top quartile. This can be a good buy, especially if it is outperforming on total return basis , for investors seeking high income yields.

Superior return on equity

The company management has delivered better return on equity in the most recent 4 quarters than its peers, placing it in the top quartile.

Superior return on assets

The company management has delivered better return on assets in the most recent 4 quarters than its peers, placing it in the top quartile.

Low debt

The company is less leveraged than its peers ,, and is among the top quartile, which makes it more flexible. However, do check the news and look at its sector. Sometimes this is low because the company is not growing and has no growth potential.

What we don’t like:

High volatility

The total returns for this company are volatile and above median for its sector over the past 5 years. Make sure you have the risk tolerance for investing in such stock.

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.

Negative cashflow

The company had negative total cash flow in the most recent four quarters.

Low Revenue Growth

This stock has shown below median revenue 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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