Critical Comparison: GRUPO AVAL ACCI/S (NYSE:AVAL) & Bank of Montreal (NYSE:BMO)

GRUPO AVAL ACCI/S (NYSE:AVAL) and Bank of Montreal (NYSE:BMO) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, earnings, risk, institutional ownership, valuation and profitability.

Institutional and Insider Ownership

5.7% of GRUPO AVAL ACCI/S shares are held by institutional investors. Comparatively, 41.7% of Bank of Montreal shares are held by institutional investors. 1.0% of Bank of Montreal shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Dividends

GRUPO AVAL ACCI/S pays an annual dividend of $0.37 per share and has a dividend yield of 4.2%. Bank of Montreal pays an annual dividend of $3.13 per share and has a dividend yield of 4.0%. GRUPO AVAL ACCI/S pays out 46.3% of its earnings in the form of a dividend. Bank of Montreal pays out 44.1% 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 2 consecutive years.

Risk & Volatility

GRUPO AVAL ACCI/S has a beta of 0.98, indicating that its stock price is 2% less volatile than the S&P 500. Comparatively, Bank of Montreal has a beta of 1.18, indicating that its stock price is 18% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations for GRUPO AVAL ACCI/S and Bank of Montreal, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
GRUPO AVAL ACCI/S 0 0 1 0 3.00
Bank of Montreal 1 6 2 0 2.11

Bank of Montreal has a consensus target price of $103.67, indicating a potential upside of 31.87%. Given Bank of Montreal’s higher possible upside, analysts clearly believe Bank of Montreal is more favorable than GRUPO AVAL ACCI/S.

Profitability

This table compares GRUPO AVAL ACCI/S and Bank of Montreal’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
GRUPO AVAL ACCI/S 11.59% 12.39% 1.43%
Bank of Montreal 14.86% 14.03% 0.75%

Earnings & Valuation

This table compares GRUPO AVAL ACCI/S and Bank of Montreal’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
GRUPO AVAL ACCI/S $9.83 billion 1.01 $896.30 million $0.80 11.10
Bank of Montreal $29.16 billion 1.72 $4.33 billion $7.10 11.07

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

Summary

Bank of Montreal beats GRUPO AVAL ACCI/S on 13 of the 17 factors compared between the two stocks.

About GRUPO AVAL ACCI/S

Grupo Aval Acciones y Valores S.A. provides a range of financial services and products to public and private sector customers in Colombia and Central America. The company's deposit products and services include checking accounts, savings accounts, and time deposits, as well as other deposits consisting of deposits from correspondent accounts, cashier checks, and collection services. It also provides loan products, such as commercial loans that comprise general purpose loans, working capital loans, loans funded by development banks, corporate credit cards, and overdraft loans; consumer loans comprising personal loans, automobile and other vehicle loans, credit cards, overdrafts, loans funded by development banks, and general purpose loans; microcredit loans; and mortgage loans. In addition, the company offers pension and severance fund management services; and trust, bonded warehousing and brokerage transactions, real estate escrow, merchandise and document storage and deposit, customs agency, cargo management, surety bond and merchandise distribution, bancassurance, and payment and collection services, as well as engages in deposit and lending operations in foreign currencies. Further, it is involved in merchant and investment banking activities; trading activities that include fixed income trading, and derivatives and foreign exchange operations, as well as the provision of treasury, pension plan administration, investment fund advice, financial advisory, leasing, private banking, and insurance services. As of December 31, 2017, the company operated through a network of 1,421 branches and 3,781 ATMs in Colombia; and 350 branches and 1,993 ATMs in Central America. Grupo Aval Acciones y Valores S.A. was founded in 1994 and is based in Bogotá, Colombia.

About Bank of Montreal

Bank of Montreal provides diversified financial services primarily in North America. It operates through three groups: Personal and Commercial Banking, Wealth Management, and BMO Capital Markets. The company's personal banking products and services include checking and savings accounts, credit cards, mortgages, and financial and investment advice services; and commercial banking products and services comprise business deposit accounts, commercial credit cards, business loans and commercial mortgages, cash management solutions, foreign exchange, and specialized banking programs for small business and commercial banking customers, as well as wealth management products and services, such as insurance products. It also offers equity and debt underwriting, corporate lending and project financing, mergers and acquisitions advisory services, securitization, treasury management, risk management, equity and fixed income research, and institutional sales and trading services to corporate, institutional, and government clients. In addition, the company offers trade finance, investment management, online investing, trust and estate services, tax planning, and investment solutions to institutional investors, as well as industry-leading research, sales, and trading services. It operates approximately 1,500 branches in Canada and the United States, as well as offices in 27 jurisdictions. The company was founded in 1817 and is headquartered in Montreal, Canada.

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