Contrasting Agricultural Bank of China (OTCMKTS:ACGBF) and Bank of Montreal (NYSE:BMO)

Agricultural Bank of China (OTCMKTS:ACGBF) and Bank of Montreal (NYSE:BMO) are both financial services companies, but which is the better stock? We will compare the two companies based on the strength of their risk, analyst recommendations, institutional ownership, valuation, dividends, earnings and profitability.

Valuation & Earnings

This table compares Agricultural Bank of China and Bank of Montreal’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Agricultural Bank of China	N/A	N/A	N/A	$0.56	0.75
Bank of Montreal	$33.94 billion	1.78	$3.24 billion	$6.02	13.78

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

Dividends

Agricultural Bank of China pays an annual dividend of $0.18 per share and has a dividend yield of 42.6%. Bank of Montreal pays an annual dividend of $4.49 per share and has a dividend yield of 5.4%. Agricultural Bank of China pays out 32.0% of its earnings in the form of a dividend. Bank of Montreal pays out 74.6% 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. Agricultural Bank of China is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider and Institutional Ownership

2.0% of Agricultural Bank of China shares are owned by institutional investors. Comparatively, 45.8% of Bank of Montreal shares are owned by institutional investors. 1.0% of Bank of Montreal shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent ratings for Agricultural Bank of China and Bank of Montreal, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Agricultural Bank of China	0	0	0	0	N/A
Bank of Montreal	0	8	2	0	2.20

Bank of Montreal has a consensus target price of $119.75, indicating a potential upside of 44.35%. Given Bank of Montreal’s higher probable upside, analysts clearly believe Bank of Montreal is more favorable than Agricultural Bank of China.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Agricultural Bank of China	N/A	N/A	N/A
Bank of Montreal	8.50%	11.23%	0.60%

Summary

Bank of Montreal beats Agricultural Bank of China on 10 of the 12 factors compared between the two stocks.

About Agricultural Bank of China

Agricultural Bank of China Limited, together with its subsidiaries, provides banking products and services. The company operates through Corporate Banking, Personal Banking, and Treasury Operations segments. It offers demand, personal call, foreign currency call, time or demand optional, foreign exchange call, foreign exchange time, savings, agreed term, and negotiated deposit accounts, as well as certificates of deposit; and loans, including housing, consumer, business, fixed asset, working capital, real estate, and entrusted syndicated loans, as well as trade finances, guarantees and commitments, and loans with custody of export rebates accounts. The company provides credit card, debit card, payment and settlement, private banking, cash management, investment banking, custody, financial market, and financial institution services, as well as trading and wealth management services; and personal fund collection and automatic transfer services. In addition, it offers agro-related personal and corporate banking products and services; telephone, mobile, self-service, television, and SMS banking services; financial leasing services; fund management services; asset custodian services; and insurance and reinsurance related products and services. The company operates domestic branches, including specialized institutions, training institutes, tier-1 branches, tier-2 branches, tier-1 sub-branches, foundation-level branch outlets and other establishments; overseas branches in Hong Kong, Singapore, Seoul, New York, Dubai International Financial Centre, Tokyo, Frankfurt, Sydney, Luxemburg, Dubai, London, Macao, and Hanoi; and overseas representative offices in Vancouver, Taipei, Sao Paulo, and Dushanbe. The company was founded in 1951 and is based in Beijing, the People's Republic of China.

About Bank of Montreal

Bank of Montreal provides diversified financial services primarily in North America. It operates through Canadian P&C, U.S P&C, BMO Wealth Management, and BMO Capital Markets segments. The company’s personal banking products and services include deposits, mortgages, home lending, consumer credit, small business lending, credit cards, cash management, financial and investment advice, and other banking services; and commercial banking products and services comprise various of financing options and treasury and payment solutions, as well as risk management products. It also offers investing, banking, and wealth management advisory; digital investing services; financial solutions for individuals, families, and businesses; provides investment management services to institutional, retail, and high net worth investors; and diversified insurance, and wealth and pension de-risking solutions. In addition, the company provides individual life, critical illness and annuity products, as well as segregated funds, and group creditor and travel insurance to customers; debt and equity capital-raising, loan origination and syndication, balance sheet management, treasury management, mergers and acquisitions advice, restructurings and recapitalizations, trade finance, and risk mitigation services, as well as a range of banking and other operating services. Further, the company offers research and access to financial markets for institutional, corporate and retail clients through an integrated suite of sales and trading solutions related to debt, foreign exchange, interest rates, credit, equities, securitization, and commodities; provides new product development and origination services, as well as risk management and advisory services for hedging strategies, including in interest rates, foreign exchange rates and commodities prices; and funding and liquidity management services. The company was founded in 1817 and is headquartered in Montreal, Canada.