Contrasting Simmons First National (NASDAQ:SFNC) and Bank Of Montreal (NYSE:BMO)

Bank Of Montreal (NYSE:BMO) and Simmons First National (NASDAQ:SFNC) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, institutional ownership, earnings, profitability, valuation and risk.

Earnings and Valuation

This table compares Bank Of Montreal and Simmons First National”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bank Of Montreal	$55.92 billion	2.18	$6.22 billion	$8.86	19.80
Simmons First National	$1.43 billion	2.40	-$397.55 million	($2.53)	-9.36

Bank Of Montreal has higher revenue and earnings than Simmons First National. Simmons First National 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.

Analyst Ratings

This is a breakdown of current ratings and price targets for Bank Of Montreal and Simmons First National, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bank Of Montreal	1	6	5	0	2.33
Simmons First National	0	5	3	1	2.56

Bank Of Montreal presently has a consensus target price of $163.00, indicating a potential downside of 7.10%. Simmons First National has a consensus target price of $25.21, indicating a potential upside of 6.43%. Given Simmons First National’s stronger consensus rating and higher probable upside, analysts clearly believe Simmons First National is more favorable than Bank Of Montreal.

Dividends

Bank Of Montreal pays an annual dividend of $4.81 per share and has a dividend yield of 2.7%. Simmons First National pays an annual dividend of $0.86 per share and has a dividend yield of 3.6%. Bank Of Montreal pays out 54.3% of its earnings in the form of a dividend. Simmons First National pays out -34.0% 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 raised its dividend for 4 consecutive years and Simmons First National has raised its dividend for 14 consecutive years. Simmons First National is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Bank Of Montreal has a beta of 0.93, indicating that its stock price is 7% less volatile than the S&P 500. Comparatively, Simmons First National has a beta of 0.89, indicating that its stock price is 11% less volatile than the S&P 500.

Profitability

This table compares Bank Of Montreal and Simmons First National’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bank Of Montreal	11.72%	13.60%	0.71%
Simmons First National	-24.64%	8.32%	1.16%

Institutional and Insider Ownership

45.8% of Bank Of Montreal shares are owned by institutional investors. Comparatively, 27.6% of Simmons First National shares are owned by institutional investors. 1.0% of Bank Of Montreal shares are owned by insiders. Comparatively, 0.8% of Simmons First National shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Summary

Bank Of Montreal beats Simmons First National on 10 of the 18 factors compared between the two stocks.

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.

About Simmons First National

Simmons First National Corporation operates as the holding company for Simmons Bank that provides banking and other financial products and services to individuals and businesses. The company offers checking, savings, and time deposits; consumer, real estate, and commercial loans; agricultural finance, equipment, and small business administration lending; trust and fiduciary services; credit cards; investment management products; treasury management; insurance products; and securities and investment services. It also provides ATM services; Internet and mobile banking platforms; overdraft facilities; and safe deposit boxes. The company was founded in 1903 and is headquartered in Pine Bluff, Arkansas.