Value: Bank of Montreal (BMO)

Bank of Montreal (BMO) continues to rebound from the darkest days of the financial crisis as it recently surprised on fiscal second quarter estimates by 10.3%.

Bank of Montreal is among Canada’s largest banks, offering personal, corporate and commercial banking services in North America.

Revenue and Net Income Rise in the Second Quarter

On May 26, the company reported fiscal second quarter 2010 results and, once again, year over year comparisons were good. It was the fifth consecutive quarter of rising revenue.

Net income nearly doubled to $745 million from $387 million in 2009.

Credit losses also improved, with provisions falling to $249 million from $372 million in the second quarter of 2009.

Revenue improved in most of its segments. It rose 27% to $864 million in the BMO Capital Markets group as trading revenues were significantly higher than the prior year.

The company also acquired assets and liabilities of a Rockford, Illinois-based bank from the FDIC. It had 52 branches which added about US$2.2 billion in deposits and US$2.5 billion in assets to Bank of Montreal’s balance sheets.

The acquisition expanded its branch network to communities in northern Illinois and southern Wisconsin where it already had a strong commercial lending business.

Zacks Consensus Estimates Move Higher

As we’ve been seeing for the past year or so, Bank of Montreal would beat on the quarter, and then the estimates would rise. That happened again after the second quarter results.

3 estimates have moved higher for fiscal 2010 in the last 30 days which has pushed the Zacks Consensus up by 9 cents to $4.70 per share.

Value Fundamentals

Bank of Montreal continues to be a value stock. It has a forward P/E of 11.5, which is under the industry average of 12.2.

It also pays out a juicy dividend, that is currently yielding 4.9%.

Bank of Montreal is now a Zacks #2 Rank (buy) stock.

Read the Apr 5, 2010 article.

Update to Previous Value Zacks Rank Buy Stocks

Nelnet, Inc. (NNI) is getting its finances in order ahead of planned July 1 federal changes in student loans. While the stock is cheap, at 5.1x forward earnings, 2011 is the “unknown” for the company as the new regulations really bite. Read the full article.

Medical Action Industries (MDCI) has attractive valuations. It is trading at 12.7x earnings which is well under the industry average of 21.3. Read the full article.

Conn’s Inc. (CONN) has surprised on the Zacks Consensus two quarters in a row but sales have recently taken a dive. Is retail telling us the recovery is fading? Read the full article.

Sotheby’s (BID) is a stock that shouldn’t be on a value investor’s radar. The recent market downturn has suddenly pushed it into “value” territory as its forward P/E has now dropped to 14.9. Read the full article.

Zacks Investment Research

About Tracey Ryniec 60 Articles

Affiliation: Zacks Investment Research

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.

Visit: Zacks Investment Research

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