Bank of Montreal reports 8.1% revenue growth in FY2016
06.12.2016 • About Bank of Montreal (
$BMO) • By InTwits
Bank of Montreal reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Bank of Montreal has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.3%. At the same time it's in pair with industry average of 3.1%.
- CAPEX is quite volatile: 1,073 in 2016, 2,994 in 2015, 5,290 in 2014, 6,297 in 2013, 5,478 in 2012
- The company has potentially unprofitable business model: ROIC is at 6.7%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Bank of Montreal ($BMO) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 20,967 | 20,651 | 22,803 | 23,784 | 25,717 | 8.1% |
| Net Income | 4,115 | 4,130 | 4,277 | 4,370 | 4,622 | 5.8% |
Balance Sheet
|
|---|
| Cash | 19,941 | 26,089 | 28,386 | 40,295 | 31,653 | -21.4% |
| Short Term Debt | 23,439 | 22,446 | 27,348 | 21,226 | 25,106 | 18.3% |
| Long Term Debt | 4,555 | 3,996 | 4,913 | 4,416 | 4,439 | 0.5% |
Cash flow
|
|---|
| Capex | 366 | 361 | 355 | 179 | 224 | 25.1% |
Ratios
|
|---|
| Revenue growth | 10.4% | -1.5% | 10.4% | 4.3% | 8.1% | |
| Net Income Margin | 19.6% | 20.0% | 18.8% | 18.4% | 18.0% | -0.4% |
| CAPEX, % of revenue | 1.7% | 1.7% | 1.6% | 0.8% | 0.9% | 0.1% |
| ROIC | 5.5% | 5.7% | 7.0% | 6.3% | 6.7% | 0.5% |
| ROE | 16.0% | 14.8% | 14.1% | 12.6% | 12.0% | -0.6% |
Bank of Montreal ($BMO) key quoterly financial indicators
| mln. CAD | FY16Q1 | FY16Q2 | FY16Q3 | FY16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 6,145 | 6,232 | 6,839 | 6,501 | -1.5% | 10.6% | 15.8% | 8.3% |
| Net Income | 1,060 | 973 | 1,245 | 1,344 | 7.5% | -2.0% | 5.1% | 11.4% |
Balance Sheet
|
|---|
| Cash | 38,961 | 36,111 | 37,748 | 31,653 | -12.2% | -10.6% | -22.5% | -21.4% |
| Short Term Debt | 24,208 | 27,071 | 27,092 | 25,106 | -19.3% | 4.5% | -2.6% | 18.3% |
| Long Term Debt | 5,250 | 4,643 | 4,461 | 4,439 | 5.8% | 4.7% | 0.6% | 0.5% |
Ratios
|
|---|
| Net Income Margin | 17.2% | 15.6% | 18.2% | 20.7% | 1.4% | -2.0% | -1.9% | 0.6% |
Revenue and profitability
The company's Revenue increased on 8.1%. Revenue growth showed acceleration in FY16Q4 - it increased 8.3% YoY.
Net Income marign showed almost no change in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 0.87% in FY2016. CAPEX/Revenue decreased slightly on 0.88 pp from 1.7% in FY2013 to 0.87% in FY2016. It's average CAPEX/Revenue for the last three years was 1.1%.
Return on investment
The company operates at low ROIC (6.73%) and ROE (11.98%). ROIC showed almost no change in FY2016. ROE decreased slightly on 0.63 pp from 12.6% to 12.0% in FY2016.
Leverage (Debt)
Debt jumped on 15.2% while cash dropped on 21.4%.
Management team
The company's CEO is William Downe. William Downe has 11 years tenure at the company. Bank of Montreal's CFO Thomas E Flynn "Tom" has spent 11 years at the company.
Appendix 1: Peers in Financial
Below you can find Bank of Montreal benchmarking vs. other companies in Financial industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Grenville Strategic Royalty Corp ($GRC) | | | | 317.2% | |
| StorageVault Canada Inc ($SVI) | | 22.2% | 7.5% | 111.8% | |
| Slate Retail REIT ($SRT.UN) | | 316.8% | 229.7% | 92.5% | 21.6% |
| Mogo Finance Technology Inc ($GO) | | 13.7% | 34.6% | 86.0% | 14.6% |
| Morguard Corp ($MRC) | | 27.2% | 9.2% | 58.8% | 4.6% |
| |
|---|
| Median (54 companies) | | 7.1% | 9.0% | 3.3% | 5.2% |
|---|
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Olympia Financial Group Inc ($OLY) | 80.9% | 82.6% | 83.2% | 84.5% | 83.5% |
| Morguard Corp ($MRC) | 74.0% | 69.9% | 68.6% | 76.5% | 75.5% |
| Mogo Finance Technology Inc ($GO) | 70.4% | 64.5% | 63.4% | 62.3% | |
| StorageVault Canada Inc ($SVI) | 18.2% | 22.6% | 18.3% | 52.4% | |
| Clarke Inc ($CKI) | 28.1% | 20.0% | 18.9% | 43.4% | 41.6% |
| |
|---|
| Median (9 companies) | 28.1% | 30.7% | 28.3% | 43.4% | 30.3% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Firm Capital Mortgage Investment Corp ($FC) | 87.6% | 87.9% | 88.8% | 86.6% | |
| Equitable Group Inc ($EQB) | 88.1% | 87.4% | 86.0% | 84.7% | 83.0% |
| Atrium Mortgage Investment Corp ($AI) | 79.8% | | | 81.9% | 83.2% |
| Trez Capital Mortgage Investment Corp ($TZZ) | | | | 76.2% | |
| First National Financial Corp ($FN) | 67.8% | 76.5% | 77.1% | 74.6% | |
| |
|---|
| Median (37 companies) | 43.7% | 33.5% | 39.8% | 32.5% | 43.1% |
|---|
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Dundee Corp ($DC.A) | 10.3% | 14.1% | 88.8% | 123.6% | |
| Gazit-Globe Ltd ($GZT) | 80.2% | 43.3% | 52.1% | 69.3% | 95.5% |
| First Capital Realty Inc ($FCR) | 127.9% | 76.1% | 73.8% | 56.7% | 79.7% |
| Killam Properties Inc ($KMP) | 80.7% | 114.1% | 143.5% | 46.7% | 59.9% |
| StorageVault Canada Inc ($SVI) | 150.5% | 73.3% | 79.1% | 21.4% | |
| |
|---|
| Median (56 companies) | 0.6% | 0.6% | 0.7% | 0.7% | 0.7% |
|---|
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| CI Financial Corp ($CIX) | | | | | 24.1% |
| FirstService Corp ($FSV) | | | | | 17.4% |
| IGM Financial Inc ($IGM) | 14.2% | 14.2% | 13.7% | 13.7% | 13.1% |
| Alaris Royalty Corp ($AD) | 9.5% | 10.1% | 10.7% | 7.3% | 12.3% |
| Genworth MI Canada Inc ($MIC) | 11.9% | 9.6% | 9.7% | 9.5% | 9.4% |
| |
|---|
| Median (56 companies) | 4.6% | 3.8% | 3.9% | 3.0% | 3.1% |
|---|
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Element Financial Corp ($EFN) | 140.2x | 31.9x | 37.6x | 79.9x | 22.6x |
| First National Financial Corp ($FN) | 34.3x | 33.7x | 40.9x | 37.4x | |
| StorageVault Canada Inc ($SVI) | 11.2x | 9.7x | 13.6x | 35.7x | |
| Gazit-Globe Ltd ($GZT) | 12.8x | 12.7x | 15.3x | 22.1x | 15.2x |
| Equitable Group Inc ($EQB) | 11.8x | 10.2x | 9.8x | 12.3x | 13.7x |
| |
|---|
| Median (28 companies) | 5.3x | 4.6x | 4.7x | 6.0x | 7.8x |
|---|
