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Bank of Montreal (BMO) Soars to 52-Week High, Time to Cash Out?

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Have you been paying attention to shares of Bank Of Montreal (BMO - Free Report) ? Shares have been on the move with the stock up 6.9% over the past month. The stock hit a new 52-week high of $107.35 in the previous session. Bank Of Montreal has gained 41% since the start of the year compared to the 21.8% move for the Zacks Finance sector and the 19% return for the Zacks Banks - Foreign industry.

What's Driving the Outperformance?

The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on August 24, 2021, Bank of Montreal reported EPS of $2.8 versus consensus estimate of $2.32.

For the current fiscal year, Bank of Montreal is expected to post earnings of $10.03 per share on $20.25 billion in revenues. This represents a 75.04% change in EPS on an 8.25% change in revenues. For the next fiscal year, the company is expected to earn $9.77 per share on $20.33 billion in revenues. This represents a year-over-year change of -2.59% and 0.44%, respectively.

Valuation Metrics

Bank of Montreal may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.

On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

Bank of Montreal has a Value Score of B. The stock's Growth and Momentum Scores are C and D, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 10.7X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 15.5X versus its peer group's average of 10.8X. Additionally, the stock has a PEG ratio of 0.68. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Bank of Montreal currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Bank of Montreal meets the list of requirements. Thus, it seems as though Bank of Montreal shares could have a bit more room to run in the near term.

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