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GuruFocus has detected 2 Warning Signs with Bank of Montreal $BMO.
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Bank of Montreal (NYSE:BMO)
Intrinsic Value: Projected FCF
$85.05 (As of Today)

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company. The details of how we calculate the intrinsic value of stocks are described in detail here.

As of today, Bank of Montreal's projected FCF intrinsic value is $85.05. The stock price of Bank of Montreal is $67.79. Therefore, Bank of Montreal's Price to Intrinsic Value: Projected FCF Ratio of today is 0.8.

BMO' s Price-to-Intrinsic-Value-Projected-FCF Range Over the Past 10 Years
Min: 0.39   Max: 207.81
Current: 0.8

0.39
207.81

During the past 13 years, the highest Price to Intrinsic Value: Projected FCF Ratio of Bank of Montreal was 207.81. The lowest was 0.39. And the median was 1.40.

BMO's Price-to-Intrinsic-Value-Projected-FCF is ranked lower than
51% of the 953 Companies
in the Global Banks - Global industry.

( Industry Median: 0.78 vs. BMO: 0.80 )

Definition

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company.

The details of how we calculate the intrinsic value of stocks are described in detail here.

This method smooths out the free cash flow over the past 6-7 years, multiplies the results by a growth multiple, and adds a portion of total equity.

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + 0.8*Total Equity(most recent))/Shares Outstanding

In the case of negative total equity, the following formula is used (see the Total Equity section for the reason):

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + Total Equity(most recent)/0.8)/Shares Outstanding


Here Bank of Montreal's FCF(6 year avg) is calculate as

Bank of Montreal Quarterly Data

201501201504201507201510201601201604201607201610201701201704
total_freecashflow 8,0147273,431-10,1186,511-2,465520-7,5755,952-564
201207201210201301201304201307201310201401201404201407201410
total_freecashflow 3,345-14,40110,5552,4342,745-4,8048,338-89125-11,448
201107201110201201201204
total_freecashflow 11,475-13,08823,615-3,525

Add all the Free Cash Flow together and divide 6 will get Bank of Montreal's FCF(6 year avg) = $3,284.80.

Bank of Montreal's Intrinsic Value: Projected FCF for today is calculated as

Intrinsic Value=(Growth Multiple*Free Cash Flow(6 year avg)+Total Equity(Apr17)*0.8)/Shares Outstanding
=(9.52035159596*3284.80302594+33424.8716231*0.8)/653.555
=88.76

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


Explanation

The growth multiple is capped between 8.35 and 17.74.

Total equity weighting is more art than science and it should always be revisited in more detail when researching a company. Weightings from 0% to 100% to more than 100% are possible. 80% was chosen as a happy medium after taking the above ideas into consideration. Learn more here.

Bank of Montreal's Price to Intrinsic Value: Projected FCF Ratio for today is calculated as

Price to Intrinsic Value: Projected FCF=Share Price/Intrinsic Value: Projected FCF
=67.79/88.7643381642
=0.76

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


Related Terms

Intrinsic Value: DCF (Earnings Based), Intrinsic Value: DCF (FCF Based), Free Cash Flow


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

Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14Oct15Oct16
Projected FCF -87.27-43.3216.80-7.4321.6352.9896.87104.0364.4773.90

Bank of Montreal Quarterly Data

Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17Apr17
Projected FCF 98.35102.70104.3464.4791.65106.7192.1073.9092.8183.68
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