Reviewing Bank of Montreal (NYSE:BMO) and Westpac Banking (OTCMKTS:WEBNF)

Westpac Banking (OTCMKTS:WEBNF – Get Your Free Report ) and Bank of Montreal (NYSE:BMO – Get Your Free Report ) are both financial services companies, but which is the better stock? We’ll compare the two businesses based on the strength of their analyst recommendations, valuation, risk, profitability, institutional ownership, earnings and dividends.

return

This table compares Westpac Banking and Bank of Montreal’s net margins, return on equity and return on assets.

Analyst recommendations

This is a summary of recent recommendations for Westpac Banking and Bank of Montreal, as reported by MarketBeat.

Bank of Montreal has a consensus target price of $127.50, indicating a potential upside of 52.99%. Given Bank of Montreal’s stronger consensus rating and higher probable upside, analysts plainly believe Bank of Montreal is more favorable than Westpac Banking.

Institutional and insider ownership

13.9% of Westpac Banking shares are held by institutional investors. Comparatively, 45.8% of Bank of Montreal shares are held by institutional investors. 1.0% of Bank of Montreal shares are held by company insiders. Strong institutional ownership is an indication that big money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Earnings and Rating

This table compares Westpac Banking and Bank of Montreal’s top-line revenue, earnings per share and valuation.

Bank of Montreal has higher revenue and earnings than Westpac Banking. Westpac Banking trades at a lower price-to-earnings ratio than Bank of Montreal, indicating that it is currently the more affordable of the two stocks.

dividends

Westpac Banking pays an annual dividend of $1.78 per share and has a dividend yield of 10.0%. Bank of Montreal pays an annual dividend of $4.53 per share and has a dividend yield of 5.4%. Westpac Banking pays out 74.6% of earnings as a dividend. Bank of Montreal pays out 75.2% of its earnings as dividends, suggesting that it may not have enough earnings to cover its dividend payout going forward. Westpac Banking is clearly the better dividend stock given its higher yield and lower payout ratio.

Summary

Bank of Montreal beats Westpac Banking on 11 of the 13 factors compared between the two stocks.

About Westpac Banking

(Get a free report)

Westpac Banking Corporation provides various banking and financial services in Australia, New Zealand and internationally. The company operates through Consumer, Business, Consumer and Business Banking, Westpac Institutional Bank, Specialist Businesses and Westpac New Zealand segments. Offers Savings, Term Deposit, Commercial Transaction, Non-Profit Transaction, Foreign Exchange, Farm Management Deposit, Project Trust and Retention and Statutory Trust Accounts; home, personal, business and commercial loans; machinery and equipment financing; business overdrafts and bank guarantees; debit and credit cards; international and travel services; stock trading services; investment products; and home, auto, travel, life, RV and trailer, credit card and loan repayment, boat and business insurance products. In addition, the company offers corporate and institutional banking, transaction banking, financial market, corporate and structured finance, trade and supply chain finance, and industry-specific banking and treasury services, as well as online banking. It serves individuals; small and medium enterprises; commercial and agribusiness; and private wealth clients; and corporate, institutional and government clients. The company was formerly known as Bank of New South Wales and changed its name to Westpac Banking Corporation in October 1982. Westpac Banking Corporation was founded in 1817 and is headquartered in Sydney, Australia.

About the Bank of Montreal

(Get a free report)

Bank of Montreal offers diversified financial services primarily in North America. It operates through the Canadian P&C, US P&C, BMO Wealth Management and BMO Capital Markets segments. The company’s personal banking products and services include deposits, mortgages, home loans, consumer credit, small business lending, credit cards, cash management, financial and investment advisory and other banking services; and commercial banking products and services include various financing options and treasury and payment solutions, as well as risk management products. It also provides investment, banking and wealth management advice; digital investment services; financial solutions for individuals, families and businesses; provides investment management services to institutional, retail and high net worth investors; and diversified insurance and risk reduction solutions for wealth and pensions. In addition, the company offers clients individual life, critical illness and annuity products, as well as separate funds, as well as group and travel insurance; debt and equity capital raising, loan origination and syndication, balance sheet management, treasury management, M&A advisory, restructuring and recapitalizations, trade finance and risk mitigation services, as well as a wide range of banking and other services operational services. In addition, the company provides research and access to financial markets for institutional, corporate and retail clients through an integrated suite of sales and trading solutions related to debt, foreign exchange, interest rates, credit, equities, securitization and commodities; provides new product development and generation services, as well as risk management services and consulting for hedging strategies, including interest rates, foreign exchange rates and commodity prices; and financing and liquidity management services. The company was founded in 1817 and is headquartered in Montreal, Canada.

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