Lloyds Banking Group (NYSE:LYG) and Bank of Montreal (NYSE:BMO) are both large-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, earnings, analyst recommendations, institutional ownership, dividends, profitability and risk.
Profitability
This table compares Lloyds Banking Group and Bank of Montreal's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Lloyds Banking Group | N/A | N/A | N/A |
| Bank of Montreal | 14.82% | 10.69% | 0.55% |
Valuation & Earnings
This table compares Lloyds Banking Group and Bank of Montreal's revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Lloyds Banking Group | $23.33 billion | 1.76 | $3.73 billion | $0.53 | 4.36 |
| Bank of Montreal | $25.68 billion | 2.30 | $3.79 billion | $5.73 | 15.90 |
Bank of Montreal has higher revenue and earnings than Lloyds Banking Group. Lloyds Banking 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.
Analyst Recommendations
This is a breakdown of current ratings and recommmendations for Lloyds Banking Group and Bank of Montreal, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Lloyds Banking Group | 1 | 5 | 9 | 0 | 2.53 |
| Bank of Montreal | 1 | 2 | 8 | 0 | 2.64 |
Bank of Montreal has a consensus target price of $100.0714, indicating a potential upside of 9.86%. Given Bank of Montreal's stronger consensus rating and higher possible upside, analysts plainly believe Bank of Montreal is more favorable than Lloyds Banking Group.
Volatility & Risk
Lloyds Banking Group has a beta of 1.45, indicating that its share price is 45% more volatile than the S&P 500. Comparatively, Bank of Montreal has a beta of 1.29, indicating that its share price is 29% more volatile than the S&P 500.
Dividends
Lloyds Banking Group pays an annual dividend of $0.03 per share and has a dividend yield of 1.3%. Bank of Montreal pays an annual dividend of $3.33 per share and has a dividend yield of 3.7%. Lloyds Banking Group pays out 5.7% 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.
Institutional and Insider Ownership
1.3% of Lloyds Banking Group shares are held by institutional investors. Comparatively, 39.2% of Bank of Montreal shares are held by institutional investors. 0.0% of Lloyds Banking 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 hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Summary
Bank of Montreal beats Lloyds Banking Group on 14 of the 17 factors compared between the two stocks.
