KB Financial Group (NYSE:KB) and Bank of Montreal (NYSE:BMO) are both large-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, earnings, profitability, dividends, risk and institutional ownership.
Risk and Volatility
KB Financial Group has a beta of 0.86, meaning that its share price is 14% less volatile than the S&P 500. Comparatively, Bank of Montreal has a beta of 1.29, meaning that its share price is 29% more volatile than the S&P 500.
Profitability
This table compares KB Financial Group and Bank of Montreal's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| KB Financial Group | 19.67% | 8.58% | 0.61% |
| Bank of Montreal | 14.82% | 10.69% | 0.55% |
Analyst Ratings
This is a breakdown of recent ratings and target prices for KB Financial Group and Bank of Montreal, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| KB Financial Group | 0 | 0 | 1 | 0 | 3.00 |
| Bank of Montreal | 1 | 2 | 7 | 0 | 2.60 |
Bank of Montreal has a consensus price target of $100.0714, suggesting a potential upside of 11.97%. Given Bank of Montreal's higher probable upside, analysts plainly believe Bank of Montreal is more favorable than KB Financial Group.
Insider and Institutional Ownership
5.6% of KB Financial Group shares are held by institutional investors. Comparatively, 39.2% of Bank of Montreal shares are held by institutional investors. 69.0% of KB Financial Group shares are held by insiders. Comparatively, 1.0% of Bank of Montreal shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Valuation and Earnings
This table compares KB Financial Group and Bank of Montreal's top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| KB Financial Group | $14.46 billion | 1.36 | $2.87 billion | $7.14 | 6.61 |
| Bank of Montreal | $25.68 billion | 2.25 | $3.79 billion | $5.73 | 15.60 |
Bank of Montreal has higher revenue and earnings than KB Financial Group. KB Financial Group is trading at a lower price-to-earnings ratio than Bank of Montreal, indicating that it is currently the more affordable of the two stocks.
Dividends
KB Financial Group pays an annual dividend of $1.31 per share and has a dividend yield of 2.8%. Bank of Montreal pays an annual dividend of $3.33 per share and has a dividend yield of 3.7%. KB Financial Group pays out 18.3% of its earnings in the form of a dividend. Bank of Montreal pays out 58.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Bank of Montreal has increased its dividend for 1 consecutive years. Bank of Montreal is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Summary
Bank of Montreal beats KB Financial Group on 11 of the 17 factors compared between the two stocks.
