Bank of Montreal (TSE:BMO) maintained its current share price over the past couple of month on the TSX, with a relatively tight range of CA$96.95 to CA$106.41. However, does this price actually reflect the true 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.
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What's the opportunity in Bank of Montreal?
Great news for investors – Bank of Montreal is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is CA$139.36, but it is currently trading at CA$104 on the share market, meaning that there is still an opportunity to buy now. However, given that Bank of Montreal’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
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. Though in the case of Bank of Montreal, it is expected to deliver a relatively unexciting earnings growth of 6.3%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for Bank of Montreal, at least in the near term.
What this means for you:
Are you a shareholder? Even though growth is relatively muted, since BMO is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on BMO for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy BMO. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.
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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.