Critical Review: Bank of Montreal (NYSE:BMO) and ST BK CORP/SH SH (NYSE:SBAZ)

ST BK CORP/SH SH (OTCMKTS:SBAZ) and Bank of Montreal (NYSE:BMO) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, valuation, earnings, dividends, institutional ownership, profitability and analyst recommendations.

Dividends

ST BK CORP/SH SH pays an annual dividend of $0.30 per share and has a dividend yield of 2.5%. Bank of Montreal pays an annual dividend of $2.99 per share and has a dividend yield of 4.0%. Bank of Montreal pays out 42.8% of its earnings in the form of a dividend. Bank of Montreal has raised its dividend for 2 consecutive years. Bank of Montreal is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current ratings for ST BK CORP/SH SH and Bank of Montreal, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ST BK CORP/SH SH 0 0 0 0 N/A
Bank of Montreal 1 7 2 0 2.10

Bank of Montreal has a consensus price target of $114.50, suggesting a potential upside of 53.98%. Given Bank of Montreal’s higher probable upside, analysts plainly believe Bank of Montreal is more favorable than ST BK CORP/SH SH.

Earnings & Valuation

This table compares ST BK CORP/SH SH and Bank of Montreal’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
ST BK CORP/SH SH $30.97 million 3.17 $8.58 million N/A N/A
Bank of Montreal $25.01 billion 1.90 $4.24 billion $6.99 10.64

Bank of Montreal has higher revenue and earnings than ST BK CORP/SH SH.

Insider and Institutional Ownership

1.4% of ST BK CORP/SH SH shares are owned by institutional investors. Comparatively, 42.1% of Bank of Montreal shares are owned by institutional investors. 1.0% of Bank of Montreal shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Volatility and Risk

ST BK CORP/SH SH has a beta of 0.14, suggesting that its stock price is 86% less volatile than the S&P 500. Comparatively, Bank of Montreal has a beta of 1.18, suggesting that its stock price is 18% more volatile than the S&P 500.

Profitability

This table compares ST BK CORP/SH SH and Bank of Montreal’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ST BK CORP/SH SH 26.79% 13.59% 1.31%
Bank of Montreal 17.27% 14.54% 0.78%

Summary

Bank of Montreal beats ST BK CORP/SH SH on 10 of the 15 factors compared between the two stocks.

About ST BK CORP/SH SH

State Bank Corp. engages in the provision of deposit and loan products through its subsidiary. It offers its products to individuals, businesses and professionals throughout Arizona. The company was founded in 2004 and is headquartered in Lake Havasu City, AZ.

About Bank of Montreal

Bank of Montreal provides diversified financial services primarily in North America. It operates through three groups: Personal and Commercial Banking, Wealth Management, and BMO Capital Markets. The company's personal banking products and services include checking and savings accounts, credit cards, mortgages, and financial and investment advice services; and commercial banking products and services comprise business deposit accounts, commercial credit cards, business loans and commercial mortgages, cash management solutions, foreign exchange, and specialized banking programs for small business and commercial banking customers, as well as wealth management products and services, such as insurance products. It also offers equity and debt underwriting, corporate lending and project financing, mergers and acquisitions advisory services, securitization, treasury management, risk management, equity and fixed income research, and institutional sales and trading services to corporate, institutional, and government clients. In addition, the company offers trade finance, investment management, online investing, trust and estate services, tax planning, and investment solutions to institutional investors, as well as industry-leading research, sales, and trading services. It operates approximately 1,500 branches in Canada and the United States, as well as offices in 27 jurisdictions. The company was founded in 1817 and is headquartered in Montreal, Canada.

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