Critical Survey: KeyCorp (KEY) vs. Bank of Montreal (BMO)

KeyCorp (NYSE: KEY) and Bank of Montreal (NYSE:BMO) are both large-cap financials companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, dividends, valuation, earnings, analyst recommendations, risk and institutional ownership.

Valuation and Earnings

This table compares KeyCorp 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
KeyCorp $6.87 billion 3.28 $1.30 billion $1.26 16.71
Bank of Montreal $21.48 billion 2.36 $4.09 billion $6.05 12.92

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

Dividends

KeyCorp pays an annual dividend of $0.42 per share and has a dividend yield of 2.0%. Bank of Montreal pays an annual dividend of $2.93 per share and has a dividend yield of 3.7%. KeyCorp pays out 33.3% of its earnings in the form of a dividend. Bank of Montreal pays out 48.4% 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. KeyCorp has increased its dividend for 7 consecutive years.

Institutional & Insider Ownership

81.1% of KeyCorp shares are held by institutional investors. Comparatively, 44.6% of Bank of Montreal shares are held by institutional investors. 0.7% of KeyCorp 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 is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for KeyCorp and Bank of Montreal, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
KeyCorp 1 5 16 0 2.68
Bank of Montreal 0 3 4 0 2.57

KeyCorp presently has a consensus target price of $22.03, indicating a potential upside of 4.64%. Bank of Montreal has a consensus target price of $101.50, indicating a potential upside of 29.81%. Given Bank of Montreal’s higher possible upside, analysts plainly believe Bank of Montreal is more favorable than KeyCorp.

Volatility and Risk

KeyCorp has a beta of 1.04, meaning that its stock price is 4% more volatile than the S&P 500. Comparatively, Bank of Montreal has a beta of 1.04, meaning that its stock price is 4% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
KeyCorp 18.06% 10.66% 1.10%
Bank of Montreal 19.00% 14.11% 0.79%

KeyCorp Company Profile

KeyCorp is a bank holding company. The Company is a bank-based financial services company. The Company operates through its subsidiary, KeyBank National Association (KeyBank), which is engaged in providing banking services. Through KeyBank and other subsidiaries, it provides a range of retail and commercial banking, commercial leasing, investment management, consumer finance, and investment banking products and services to individual, corporate and institutional clients. Its segments include Key Community Bank and Key Corporate Bank. Key Community Bank serves individuals and small to mid-sized businesses by offering a range of deposit, investment, lending, credit card, and personalized wealth management products and business advisory services. Key Corporate Bank is a full-service corporate and investment bank focused on serving the needs of middle market clients in industry sectors, which include consumer, energy, healthcare, industrial, public sector, real estate and technology.

Bank of Montreal Company Profile

Bank of Montreal (the Bank) is a financial services provider. The Bank provides a range of personal and commercial banking, wealth management and investment banking products and services. The Bank conducts its business through three operating groups: Personal and Commercial Banking (P&C), Wealth Management and BMO Capital Markets. The P&C business includes two retail and business banking operating segments, such as Canadian Personal and Commercial Banking (Canadian P&C), and the United States Personal and Commercial Banking (U.S. P&C). The Bank’s Wealth Management business serves a range of client segments, from mainstream to ultra-high net worth and institutional, with an offering of wealth management products and services, including insurance. BMO Capital Markets is a North American-based financial services provider offering a range of products and services to corporate, institutional and government clients. The Bank has over 1,500 bank branches in Canada and the United States.

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