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Bank of Montreal (NYSE:BMO)
Piotroski F-Score
3 (As of Today)

Warning Sign:

Piotroski F-Score of 3 is low, which usually implies poor business operation.

The zones of discrimination were as such:

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Bank of Montreal has an F-score of 5 indicating the company's financial situation is typical for a stable company.

BMO' s Piotroski F-Score Range Over the Past 10 Years
Min: 1   Max: 7
Current: 3

1
7

During the past 13 years, the highest Piotroski F-Score of Bank of Montreal was 7. The lowest was 1. And the median was 4.


Definition

How is the Piotroski F-Score calculated?

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Jul16) TTM:Last Year (Jul15) TTM:
Net Income was 922.582619339 + 746.058558559 + 759.088781401 + 953.87680049 = $3,382 Mil.
Cash Flow from Operations was -9969.4002448 + 6629.36373874 + -2310.03276642 + 0 = $-5,650 Mil.
Revenue was 3811.1995104 + 3571.93130631 + 3979.55999376 + 4315.8136684 = $15,679 Mil.
Gross Profit was 3811.1995104 + 3571.93130631 + 3979.55999376 + 4315.8136684 = $15,679 Mil.
Average Total Assets from the begining of this year (Jul15)
to the end of this year (Jul16) was
(522772.292622 + 491035.03672 + 492182.573198 + 531641.441723 + 529943.303708) / 5 = $513514.929594 Mil.
Total Assets at the begining of this year (Jul15) was $522,772 Mil.
Long-Term Debt was $0 Mil.
Total Current Assets was $0 Mil.
Total Current Liabilities was $0 Mil.
Net Income was 942.739921513 + 813.397129187 + 804.895841777 + 921.246987483 = $3,482 Mil.

Revenue was 4138.42311809 + 4170.10394324 + 3668.63905325 + 3751.84638109 = $15,729 Mil.
Gross Profit was 4138.42311809 + 4170.10394324 + 3668.63905325 + 3751.84638109 = $15,729 Mil.
Average Total Assets from the begining of last year (Jul14)
to the end of last year (Jul15) was
(546449.390074 + 525025.865144 + 554702.194357 + 513313.609467 + 522772.292622) / 5 = $532452.670333 Mil.
Total Assets at the begining of last year (Jul14) was $546,449 Mil.
Long-Term Debt was $3,446 Mil.
Total Current Assets was $0 Mil.
Total Current Liabilities was $0 Mil.

Profitability

Question 1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Bank of Montreal's current net income (TTM) was 3,382. ==> Positive ==> Score 1.

Question 2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Bank of Montreal's current cash flow from operations (TTM) was -5,650. ==> Negative ==> Score 0.

Question 3. Change in Return on Assets

Compare this year’s return on assets (1) to last year’s return on assets.

Score 1 if it’s higher, 0 if it’s lower.

ROA (This Year)=Net Income (TTM)/Total Assets at the Beginning of This Year (Jul15)
=3381.60675979/522772.292622
=0.0064686

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Jul14)
=3482.27987996/546449.390074
=0.00637256

Bank of Montreal's return on assets of this year was 0.0064686. Bank of Montreal's return on assets of last year was 0.00637256. ==> This year is higher. ==> Score 1.

Question 4. Quality of Earnings (Accrual)

Compare Cash flow return on assets (2) to return on assets (1)

Score 1 if CFROA > ROA, 0 if CFROA <= ROA.

Bank of Montreal's current net income (TTM) was 3,382. Bank of Montreal's current cash flow from operations (TTM) was -5,650. ==> -5,650 <= 3,382 ==> CFROA <= ROA ==> Score 0.

Funding

Question 5. Change in Gearing or Leverage

Compare this year’s gearing (long-term debt divided by average total assets) to last year’s gearing.

Score 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Jul16)=Long-Term Debt/Average Total Assets from Jul15 to Jul16
=0/513514.929594
=0

Gearing (Last Year: Jul15)=Long-Term Debt/Average Total Assets from Jul14 to Jul15
=3446.31889917/532452.670333
=0.00647254

Bank of Montreal's gearing of this year was 0. Bank of Montreal's gearing of last year was 0.00647254. ==> This year is lower or equal to last year. ==> Score 1.

Question 6. Change in Working Capital (Liquidity)

Compare this year’s current ratio (current assets divided by current liabilities) to last year’s current ratio.

Score 1 if this year'’s current ratio is higher, 0 if it’s lower

Current Ratio (This Year: Jul16)=Total Current Assets/Total Current Liabilities
=0/0
=

Current Ratio (Last Year: Jul15)=Total Current Assets/Total Current Liabilities
=0/0
=

Bank of Montreal's current ratio of this year was . Bank of Montreal's current ratio of last year was . ==> Last year's current ratio is higher ==> Score 0.

Question 7. Change in Shares in Issue

Compare the number of shares in issue this year, to the number in issue last year.

Score 0 if there is larger number of shares in issue this year, 1 otherwise.

Bank of Montreal's number of shares in issue this year was 0. Bank of Montreal's number of shares in issue last year was 645.6. ==> There is smaller number of shares in issue this year, or the same. ==> Score 1.

Efficiency

Question 8. Change in Gross Margin

Compare this year’s gross margin (gross profit divided by sales) to last year’s.

Score 1 if this year’s gross margin is higher, 0 if it’s lower.

Gross Margin (This Year: TTM)=Gross Profit/Revenue
=15678.5044789/15678.5044789
=1

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=15729.0124957/15729.0124957
=1

Bank of Montreal's gross margin of this year was 1. Bank of Montreal's gross margin of last year was 1. ==> Last year's gross margin is higher ==> Score 0.

Question 9. Change in asset turnover

Compare this year’s asset turnover (total sales for the year divided by total assets at the beginning of the year) to last year’s asset turnover ratio.

Score 1 if this year’s asset turnover ratio is higher, 0 if it’s lower

Asset Turnover (This Year)=Revenue (TTM)/Total Assets at the Beginning of This Year (Jul15)
=15678.5044789/522772.292622
=0.02999108

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Jul14)
=15729.0124957/546449.390074
=0.02878402

Bank of Montreal's asset turnover of this year was 0.02999108. Bank of Montreal's asset turnover of last year was 0.02878402. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=1+0+1+0+1+0+1+0+1
=5

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Bank of Montreal has an F-score of 5 indicating the company's financial situation is typical for a stable company.


Explanation

The developer of the system is Joseph D. Piotroski is relatively unknown accounting professor who shuns publicity and rarely gives interviews.

He graduated from the University of Illinois with a B.S. in accounting in 1989, received an M.B.A. from Indiana University in 1994. Five years later, in 1999, after earning a Ph.D. in accounting from the University of Michigan, he became an associate professor of accounting at the University of Chicago.

In 2000, he wrote a research paper called "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers" (pdf).

He wanted to see if he can develop a system (using a simple nine-point scoring system) that can increase the returns of a strategy of investing in low price to book (referred to in the paper as high book to market) value companies.

What he found was something that exceeded his most optimistic expectations.

Buying only those companies that scored highest (8 or 9) on his nine-point scale, or F-Score as he called it, over the 20 year period from 1976 to 1996 led to an average out-performance over the market of 13.4%.

Even more impressive were the results of a strategy of investing in the highest F-Score companies (8 or 9) and shorting companies with the lowest F-Score (0 or 1).

Over the same period from 1976 to 1996 (20 years) this strategy led to an average yearly return of 23%, substantially outperforming the average S&P 500 index return of 15.83% over the same period.


Related Terms

Net Income, Cash Flow from Operations, Revenue, Gross Profit, Total Assets, Long-Term Debt, Total Current Assets, Total Current Liabilities


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Bank of Montreal Annual Data

Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14Oct15
Question 1 1111111111
Question 2 1011011101
Question 3 0000101000
Question 4 0011001100
Question 5 0010101101
Question 6 0000000000
Question 7 0110000011
Question 8 0000000000
Question 9 0001110010
F-score 2254435434

Bank of Montreal Quarterly Data

Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16
Question 1 1111111111
Question 2 1100011100
Question 3 0000000001
Question 4 1100000000
Question 5 1100111101
Question 6 0000000000
Question 7 1010011111
Question 8 0000000000
Question 9 0111100001
F-score 5532344425
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