Community Bank System (NYSE: CBU) and Bank Of Montreal (NYSE:BMO) are both mid-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, valuation, risk, institutional ownership, dividends, profitabiliy and earnings.

Volatility and Risk

Community Bank System has a beta of 1.08, indicating that its share price is 8% more volatile than the S&P 500. Comparatively, Bank Of Montreal has a beta of 1.01, indicating that its share price is 1% more volatile than the S&P 500.

Valuation & Earnings

This table compares Community Bank System and Bank Of Montreal’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Community Bank System $425.79 million 6.01 $108.06 million $2.35 23.69
Bank Of Montreal $16.30 billion 2.98 $3.93 billion $6.02 12.38

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

Insider and Institutional Ownership

70.5% of Community Bank System shares are owned by institutional investors. Comparatively, 47.7% of Bank Of Montreal shares are owned by institutional investors. 3.2% of Community Bank System shares are owned by insiders. Comparatively, 1.0% of Bank Of Montreal shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Community Bank System pays an annual dividend of $1.28 per share and has a dividend yield of 2.3%. Bank Of Montreal pays an annual dividend of $2.64 per share and has a dividend yield of 3.5%. Community Bank System pays out 54.5% of its earnings in the form of a dividend. Bank Of Montreal pays out 43.9% 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. Community Bank System has raised its dividend for 6 consecutive years. Bank Of Montreal is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of current ratings and price targets for Community Bank System and Bank Of Montreal, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Community Bank System 1 3 0 0 1.75
Bank Of Montreal 0 9 4 0 2.31

Community Bank System presently has a consensus target price of $55.00, indicating a potential downside of 1.22%. Bank Of Montreal has a consensus target price of $88.86, indicating a potential upside of 19.19%. Given Bank Of Montreal’s stronger consensus rating and higher probable upside, analysts plainly believe Bank Of Montreal is more favorable than Community Bank System.

Profitability

This table compares Community Bank System and Bank Of Montreal’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Community Bank System 23.62% 8.84% 1.25%
Bank Of Montreal 19.60% 14.25% 0.79%

Summary

Bank Of Montreal beats Community Bank System on 9 of the 17 factors compared between the two stocks.

Community Bank System Company Profile

Community Bank System, Inc. is a bank holding company. The Company owns two subsidiaries: Community Bank, N.A. (CBNA or the Bank) and Benefit Plans Administrative Services, Inc. (BPAS). It operates in three segments: banking, employee benefit services, and All Other. The Banking segment provides lending and depository-related products and services to individuals, businesses and municipal enterprises. The Employee benefit services segment, consisting of BPAS and its subsidiaries, provides employee benefit trust services; collective investment fund; actuarial services, and healthcare consulting services. The All Other segment consists of wealth management services, including trust services provided by the personal trust unit within the Bank, broker-dealer and investment advisory services provided by Community Investment Services, Inc. (CISI), Oneida Wealth Management, Inc. (OWM) and The Carta Group, Inc, and asset management provided by Nottingham Advisors, Inc.

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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