Compare Bank of Montreal (BMO) vs Bank of America Corporation (BAC) Stock

Bank of America Corporation (BAC) offers the better valuation at 13.0x trailing P/E (11.5x forward), making it the more compelling value choice. Analysts rate Bank of Montreal (BMO) a "Buy" — based on 18 analyst ratings — the highest consensus in this comparison. The "better buy" depends entirely on your goals: growth investors should weight revenue trajectory, value investors should weight P/E and PEG, and income investors should weight dividend yield and streak.

On trailing P/E, Bank of America Corporation (BAC) is the cheapest at 13.0x versus Bank of Montreal at 17.2x. On forward P/E, Bank of Montreal is actually cheaper at 10.2x — notably different from the trailing picture, reflecting expected earnings growth. The PEG ratio (P/E divided by earnings growth rate) is the most growth-adjusted single valuation metric: Bank of America Corporation wins at 0.75x versus Bank of Montreal's 1.17x — a PEG below 1.0 traditionally signals the market is underpricing earnings growth.

Over the past 5 years, Bank of Montreal (BMO) delivered a total return of +97.1%, compared to +52.2% for Bank of America Corporation (BAC). A $10,000 investment in BMO five years ago would be worth approximately $20K today (assuming dividends reinvested). Over 10 years, the gap is even starker: BAC returned +355.5% versus BMO's +227.9%. Past returns do not guarantee future results, and the stock with the higher historical return may already have its best growth priced in.

By beta (market sensitivity over 5 years), Bank of Montreal (BMO) is the lower-risk stock at 0.66β versus Bank of America Corporation's 0.99β — meaning BAC is approximately 49% more volatile than BMO relative to the S&P 500. On balance sheet safety, Bank of America Corporation (BAC) carries a lower debt/equity ratio of 121% versus 5% for Bank of Montreal — giving it more financial flexibility in a downturn.

Bank of America Corporation (BAC) is the more profitable company, earning 16.2% net margin versus 11.1% for Bank of Montreal — meaning it keeps 16.2% of every revenue dollar as bottom-line profit. Operating margin tells a similar story: BAC leads at 18.5% versus 14.8% for BMO. At the gross margin level — before operating expenses — BAC leads at 55.4%, reflecting greater pricing power or product mix advantage. Stronger margins indicate durable pricing power, lower cost of revenue, or higher mix of software/services. They are one of the clearest signs of business quality.

The PEG ratio (forward P/E divided by expected earnings growth rate) is the most precise measure of undervaluation relative to growth potential. By this metric, Bank of America Corporation (BAC) is the more undervalued stock at a PEG of 0.75x versus Bank of Montreal's 1.17x. A PEG below 1.0 is traditionally considered the threshold for growth-adjusted undervaluation. On forward earnings alone, Bank of Montreal (BMO) trades at 10.2x forward P/E versus 11.5x for Bank of America Corporation — 1.3x cheaper on a one-year earnings basis. Analyst consensus price targets imply the most upside for BAC: 21.1% to $60.33.

All stocks in this comparison pay dividends. Bank of Montreal (BMO) offers the highest yield at 3.5%, versus 2.5% for Bank of America Corporation (BAC).

For long-horizon retirement investors, Bank of Montreal (BMO) is the stronger choice — it scores higher on the combination of lower volatility, dividend reliability, and long-term compounding (low volatility (β 0.66), 3.5% yield, +227.9% 10Y return). Both have compounded well over 10 years (BMO: +227.9%, BAC: +355.5%), confirming both are viable long-term holds — but the lower-volatility option typically results in less emotional selling during corrections. Retirement portfolios generally favour predictability over maximum returns. Consult a financial advisor before making allocation decisions.

Both stocks operate in the Financial Services sector, making this a peer-level intra-sector comparison — the same macro tailwinds and headwinds will affect both. These fundamental differences mean investors should not choose between them on a single metric — the "better stock" depends entirely on which of these characteristics aligns with your investment strategy.