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Bank of Montreal (TSE:BMO) Pre-Earnings: Here’s What to ExpectBank of Montreal ( NYSE:BMO ) shares gained in trading as investors await the Canadian bank's Q2 earnings results on May 29. Analysts are expecting earnings per share to come in at C$2.77 on revenue of C$8.054 billion, a decline from the C$2.93 per share seen in the year-ago period. The bank has not had a good track record lately when it comes to beating estimates, with only beating EPS forecasts two times during the past eight quarters. Bank of Montreal ( NYSE:BMO ) has a Strong Buy consensus rating on NYSE:BMO stock based on eight Buys, one Hold, and zero Sells assigned in the past three months. The average NYSE:BMO price target of C$135.61 per share implies 3.66% upside potential. Other equities research analysts have issued research reports about the company, with Jefferies Financial Group starting coverage on February 22nd, StockNews.com raising Bank of Montreal ( NYSE:BMO ) from a "sell" rating to a "hold" rating, and Barclays taking coverage on March 20th. Bank of Montreal ( NYSE:BMO ) has a market cap of $69.63 billion, a P/E ratio of 18.22, a price-to-earnings-growth ratio of 2.37, and a beta of 1.13. The bank reported $1.90 earnings per share (EPS) for the quarter, missing the consensus estimate of $2.24 by ($0.34). Hedge funds and other institutional investors own 45.82% of the company's stock. Technical Outlook Bank of Montreal ( NYSE:BMO ) stock closed Friday's trading session up 0.97% trading with a Relative Strength Index (RSI) of 59.22 which is poised for further growth. The daily price chart shows a strong retracement to the support zone of $93.33.
NYSE:BMO
by DEXWireNews
1
SVB: Announces bankruptcy! The situation at Silicon Valley Bank (SVB) is not particularly complicated. In short, they borrowed short and invested long, mismanaged their liquidity, and caused their own demise. The specific steps were as follows: low-interest deposit-taking, overzealous investment in Mortgage-Backed Securities (MBS), short-term liquidity gaps, forced selling of assets, and market panic. Low-interest deposit-taking: Between 2020 and 2021, due to the Federal Reserve's extended period of 0% interest rates, there was a huge financing boom in the tech industry, with a significant portion of cash flowing into SVB. SVB's deposit liabilities surged from $61.8 billion at the end of 2019 to $189.2 billion at the end of 2021, with interest rates on this portion of deposits only around 0.25%. Overzealous investment in MBS: With so much low-interest money, SVB naturally engaged in carry trade. Typically, banks focus on lending, but SVB invested a large portion of its funds in MBS. Their financial statements showed they held $13.8 billion of MBS at the end of 2019, which had grown to $98.2 billion by the end of 2021. In other words, over 65% of the deposits they took in went towards buying MBS. Short-term liquidity gap: Normally, investing in MBS is not a problem because they can be redeemed at maturity. But SVB's problem was that it held too many MBS and had too few short-term liquid assets. In today's high-interest rate environment, tech companies are struggling to survive and are gradually withdrawing money from their deposits, causing SVB's liquidity pressures to soar. Forced selling of assets: To solve the liquidity problem, management chose the cheapest option, which was to sell their MBS holdings. But now, market interest rates had increased from nearly 0 to 5% for 2-year Treasury bonds, and asset prices had fallen significantly in sync. Selling $21 billion of assets resulted in an $1.8 billion loss. Market panic: For SVB, the $1.8 billion loss was still manageable because their shareholder equity was $16 billion. However, the problem was with the $100 billion of MBS that they had not yet sold. If there was a run on the bank, this could result in a potential loss of $15 billion, causing SVB to go bankrupt. Therefore, there was a great deal of panic in the market, causing the stock price to plummet by 60% in a single day. SVB has now declared bankruptcy, and the US government has intervened. It is being managed by a specialized institution. When a bank of this size collapses, there are bound to be chain reactions. The institutions known to be affected include Circle. For those who invest in stocks, they may not have heard of it, but those who invest in cryptocurrencies certainly have, as the most famous stablecoin, USDC, is issued by Circle. The total amount is $40 billion, and in today's announcement, they revealed that $3.3 billion of their assets were stuck in SVB, accounting for almost 8%. This means that those who invest in cryptocurrencies suddenly find that their $100 has shrunk to $92. To say that it's a seismic event is not an exaggeration. There are likely dozens of institutions of a similar scale to Circle that are also trapped, but for various reasons, they are not disclosing their situation. We'll have to wait and see when they come forward. Follow me and you'll get more interesting investment information! Plus, I'll share real-time trading strategies during trading hours, including stocks, gold, crude oil, forex, cryptocurrencies, and more!
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S
by EagleEyeStrategy
22
STOCKS IM BUYING THIS WEEKI think last week's pullback in equity markets was a good thing. The market got overheated and it gave us a reminder that stocks don't always rise. Memories and patience are short in the finance industry especially with some recent trends (blockchain) skewing people's perception that building wealth gets built overnight. Not the case, in the past 50 years of the SP500's history, it has NEVER had a stretch of over a year without a 5% correction or more. So relax, this is not doomsday, it is the ebbs and flows of Mr. Market playing his tricks. Here is the list of stocks I'm buying or adding a position too. - Icahn Enterprises (see earlier post) - Scott's Miracle Grow (post coming this week) - Bank of Nova Scotia - Bank of Montreal - Citigroup - Home Capital Group (post coming next week) - Canadian Imperial Bank of Commerce - Valeant Pharmaceuticals - Equifax BNS, BMO, CM are banks I own in a fund and will simply be buying more of the fund (FIE.TO), but BNS and BMO are the two banks I would buy, if you go back one year and look at the worst performing Canadian bank, it's a pretty safe bet that the next year will be better. As well: www.theglobeandmail.com I apply this same rationale to Citigroup , one of the less fortunate American banks from last year. EFX was a stock I bought down around $90 when it sold off following a security breach announcement. I think the firm, fundamentally, is strong and will continue to regain ground. VRX is also one of those contrarian stock picks, after some allegations a couple of years ago for fraud and insider trading, I think they've found their bottom. They've also started to pay off debt which is never a bad thing for a recovering company. I'm in the process of putting a valuation on HCG and SMG and will make a post in the coming week, this will be a buy and hold value-pick. I'm liking what I'm seeing so far.
NASDAQ:IEPLong
by StuartTabor