Bank of Montreal (TSX:BMO) saw significant share price volatility over the past couple of months on the TSX, rising to the highs of CA$104.7 and falling to the lows of CA$94.75. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Bank of Montreal’s current trading price of CA$94.75 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Bank of Montreal’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for Bank of Montreal
Is Bank of Montreal still cheap?
According to my valuation model, Bank of Montreal seems to be fairly priced at around 5.83% below my intrinsic value, which means if you buy Bank of Montreal today, you’d be paying a fair price for it. And if you believe the company’s true value is CA$100.61, then there’s not much of an upside to gain from mispricing. In addition to this, it seems like Bank of Montreal’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
What kind of growth will Bank of Montreal generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. With profit expected to grow by a double-digit 17.41% in the upcoming year, the short-term outlook is positive for Bank of Montreal. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? BMO’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on BMO, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Bank of Montreal. You can find everything you need to know about Bank of Montreal in the latest infographic research report. If you are no longer interested in Bank of Montreal, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.