Bank of Montreal (NYSE:BMO) and Banco Santander Brasil (NYSE:BSBR) are both large-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, dividends, earnings, analyst recommendations, profitability, institutional ownership and risk.
Profitability
This table compares Bank of Montreal and Banco Santander Brasil’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Bank of Montreal | 14.86% | 14.03% | 0.75% |
| Banco Santander Brasil | 15.98% | 15.49% | 2.03% |
Valuation and Earnings
This table compares Bank of Montreal and Banco Santander Brasil’s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Bank of Montreal | $29.16 billion | 1.72 | $4.33 billion | $7.10 | 11.04 |
| Banco Santander Brasil | $24.16 billion | 1.59 | $3.44 billion | $0.90 | 11.47 |
Bank of Montreal has higher revenue and earnings than Banco Santander Brasil. Bank of Montreal is trading at a lower price-to-earnings ratio than Banco Santander Brasil, indicating that it is currently the more affordable of the two stocks.
Dividends
Bank of Montreal pays an annual dividend of $3.13 per share and has a dividend yield of 4.0%. Banco Santander Brasil pays an annual dividend of $0.60 per share and has a dividend yield of 5.8%. Bank of Montreal pays out 44.1% of its earnings in the form of a dividend. Banco Santander Brasil pays out 66.7% 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 3 consecutive years.
Analyst Ratings
This is a summary of recent ratings and price targets for Bank of Montreal and Banco Santander Brasil, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Bank of Montreal | 1 | 6 | 2 | 0 | 2.11 |
| Banco Santander Brasil | 0 | 2 | 1 | 0 | 2.33 |
Bank of Montreal presently has a consensus target price of $103.67, suggesting a potential upside of 32.31%. Banco Santander Brasil has a consensus target price of $12.00, suggesting a potential upside of 16.28%. Given Bank of Montreal’s higher probable upside, research analysts clearly believe Bank of Montreal is more favorable than Banco Santander Brasil.
Risk and Volatility
Bank of Montreal has a beta of 1.18, indicating that its share price is 18% more volatile than the S&P 500. Comparatively, Banco Santander Brasil has a beta of 0.81, indicating that its share price is 19% less volatile than the S&P 500.
Insider and Institutional Ownership
41.8% of Bank of Montreal shares are held by institutional investors. Comparatively, 1.0% of Banco Santander Brasil shares are held by institutional investors. 1.0% of Bank of Montreal shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
Summary
Bank of Montreal beats Banco Santander Brasil on 12 of the 17 factors compared between the two stocks.
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.
About Banco Santander Brasil
Banco Santander (Brasil) S.A. provides commercial banking products and services to individuals, small and medium enterprises, and corporate customers in Brazil and internationally. It operates through two segments, Commercial Banking and Global Wholesale Banking. The company offers checking and savings accounts; priority services, such as withdrawals, debit cards, deposits, and transfers; onshore and offshore financial products and services, investment advice, and asset management services; consumer credit for purchasing motor vehicles, and other goods and services; local loans, commercial finance, trade finance, guarantees, structured loans, and cash management and funding solutions, as well as Banco Nacional de Desenvolvimento Econômico e Social on-lending transfer services; payroll, mortgage, and agribusiness loans, as well as microcredit; investment products; and credit cards and foreign exchange services. It also provides funding and financial advisory services related to projects, and origination and distribution of fixed-income securities in the debt capital markets, as well as financing for acquisitions and syndicated loans, other structured financing arrangements, and subordinated debt and energy efficiency transactions. In addition, the company offers advisory services in mergers and acquisitions, and equity capital markets transactions; stock brokerage and advisory, equity, and equity research services; derivative and investment products; and digital payment solutions. Further, it operates Webmotors, an online automotive classified. The company provides its products and services through branches, mini-branches, and ATMs; call centers; and digital channels, such as Internet banking and mobile banking. Banco Santander (Brasil) S.A. was incorporated in 1985 and is headquartered in São Paulo, Brazil.
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