Bank of Montreal (BMO) rises but lags the market: what you need to know

In the last trading session, Bank of Montreal (BMO) closed at $99.72, a +0.41% move from the previous day. The move trailed the S&P 500's 1.21% daily gain. Elsewhere, the Dow rose 1.03%, while the tech-heavy Nasdaq lost 0.01%.

Today, the bank's shares are up 3.07% over the past month, outpacing the Financials sector's 1.97% gain and the S&P 500's 3.2% gain over the same period.

Investors are hoping for a boost as Bank of Montreal approaches its next earnings release. The company is expected to post EPS of $2.46, down 12.14% from the prior year quarter.

Looking ahead to the full year, our Zacks Consensus Estimates suggest analysts expect earnings of $10.44 per share and revenue of $21.53 billion. These results represent changes of +1.26% and -0.47%, respectively, compared to last year.

It is also important to note recent changes to Bank of Montreal's analyst estimates. These revisions usually reflect the latest short-term business trends, which can change frequently. As a result, we can interpret a positive rating revision as a good sign for the company's business outlook.

Research shows that these valuation changes are directly related to near-term stock price momentum. Investors can use this with Zacks Rank. This model addresses these grading changes and provides a simple, actionable grading system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has an excellent, externally verified track record of success, with #1 stocks averaging +25% annual returns since 1988. Over the past month, the Zacks Consensus EPS Estimate has risen 0.13%. Bank of Montreal currently has a Zacks Rank #3 (Hold).

Digging into the valuation, Bank of Montreal currently has a Forward P/E ratio of 9.51. By comparison, its industry average Forward P/E is 8.32, which means Bank of Montreal trades at a premium to the group.

It's also worth noting that BMO currently has a PEG ratio of 1.33. This popular metric is similar to the more popular P/E ratio, except that the PEG ratio takes into account the company's expected earnings growth rate. Banks – foreign average PEG ratio at yesterday's closing price was 0.79.

Banks – Foreign industry is part of the financial sector. The industry currently has a Zacks Industry Rank of 153, which places it in the bottom 40% of all 250+ industries.

The Zacks Industry Rank ranks the individual companies in each of these sectors from best to worst in terms of average Zacks Rank. Our research shows that the top 50% of industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all these metrics and more at Zacks.com.

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