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What to Expect From Bank of Montreal (BMO) in Q2 Earnings?

Zacks Equity Research

Bank of Montreal BMO is scheduled to report second-quarter fiscal 2019 (ended Apr 30) results on May 29, before the opening bell. Its revenues and earnings are expected to fall year over year.

Rise in revenues and lower provisions supported the company’s results in the last reported quarter. However, rise in operating expenses acted as a headwind.

Notably, the Zacks Consensus Estimate for earnings of $1.69 for the fiscal second quarter shows a 2.9% decrease from the year-ago reported number. Also, the consensus estimate for sales is $4.23 billion, reflecting a decline of 4.8%.

Bank Of Montreal Price, Consensus and EPS Surprise

 

Bank Of Montreal Price, Consensus and EPS Surprise

Bank Of Montreal price-consensus-eps-surprise-chart | Bank Of Montreal Quote

Before we take a look at what our quantitative model predicts, let’s check the factors that are expected to influence fiscal second-quarter results.

Factors at Play

Muted non-interest revenues: Modest improvement in equity trading activities in February-April quarter will likely support Bank of Montreal’s non-interest revenues. Nonetheless, soft fixed income trading might be an offsetting factor.

Further, investment banking is not likely to be of much help. Fears of global economic slowdown and increased volatility weighed on companies’ plans to raise capital by issuing shares. Also, rise in interest rates is likely to have lowered companies’ involvement in debt issuance activities. Thus, underwriting fees are not expected to increase much for Bank of Montreal.

Decline in global M&A deal volume (due to volatile markets and increase in borrowing costs) in the quarter will likely hamper Bank of Montreal’s advisory fees.

Further, as deposit balance continues to improve, the company’s deposit and payment service charges are expected to rise in the to-be-reported quarter.

Increase in net interest income: Decent loan growth (both domestically and in the United States) and relatively higher interest rates will support Bank of Montreal’s net interest income in the fiscal second quarter.

Slight rise in expenses: Bank of Montreal’s has been facing rise in operating expenses over the past several quarters. The same trend will likely persist in the to-be-reported quarter as the company continues to invest in technology upgrades.

Earnings Whispers

Now, let’s check what our quantitative model predicts.

According to our quantitative model, it cannot be conclusively predicted if Bank of Montreal will be able to beat the Zacks Consensus Estimate this time. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better — to be confident of an earnings surprise call.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Bank of Montreal is 0.00%.

Zacks Rank: Bank of Montreal has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stocks to Consider

Banco Macro S.A. BMA has been witnessing upward estimate revisions over the past 60 days. Moreover, this Zacks #1 Ranked stock has rallied 13% so far this year.

HSBC Holdings HSBC has been witnessing upward estimate revisions over the past 60 days. Additionally, the stock has risen 2.1% so far this year. It currently carries a Zacks Rank #2.

ING Groep N.V. ING earnings estimates have remained stable over the past 60 days. Also, the company’s shares have gained 3.2% so far this year. At present, it carries a Zacks Rank of 2.

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