Bank of Montreal (TSX:BMO)(NYSE:BMO), the fourth-largest bank in Canada in terms of total assets, announced third-quarter earnings results before the market opened on August 25, and its stock has responded by rising over 5% in the trading sessions since. Let’s take a closer look at the results to determine if this could be the start of a sustained rally higher and if we should consider initiating positions today.

A growing asset base leads to better-than-expected results

Here’s a summary of Bank of Montreal’s third-quarter earnings results compared with what analysts had anticipated and its results in the same period a year ago.

Metric Reported Expected Year-Ago
Adjusted Earnings Per Share $1.86 $1.73 $1.73
Total Revenue $4.83 billion $4.70 billion $4.74 billion

Source: Financial Times 

Bank of Montreal’s adjusted earnings per share increased 7.5% and its total revenue increased 1.9% compared with the third quarter of fiscal 2014. The company’s strong earnings-per-share growth can be attributed to its adjusted net income increasing 5.9% to $1.23 billion, driven by 35.1% growth to $235 million in its U.S. personal and commercial Banking segment and 10.4% growth to $233 million in its wealth management segment.

Its slight increase in revenue can be attributed to its net interest income increasing 7.8% to $2.27 billion, driven by growth in the same two segments, including 16.3% growth to $164 million in its wealth management segment and 14.9% growth to $719 million in its U.S. personal and commercial banking segment.

Here’s a quick breakdown of 10 other notable statistics from the report compared with the year-ago period:

  1. Revenue, net of insurance claims, commissions, and changes in policy benefit liabilities, increased 9.3% to $4.61 billion
  2. Non-interest income decreased 2.8% to $2.55 billion
  3. Income before income taxes increased 10.8% to $1.53 billion
  4. Total assets increased 14.6% to $672.44 billion
  5. Total deposits increased 12.1% to $447.62 billion
  6. Total loans and acceptances increased 11.4% to $329.18 billion
  7. Total shareholders’ equity increased 15% to $38.2 billion
  8. Total assets under management and administration increased 13.2% to $879.05 billion
  9. Adjusted efficiency ratio improved 330 basis points to 60.5%
  10. Book value per share increased 18.6% to $55.36

Bank of Montreal also announced that it will be maintaining its dividend of $0.82 per share in the fourth quarter, and it will be paid out on November 26 to shareholders of record at the close of business on November 2.

Should you buy or avoid Bank of Montreal today?

It was a great quarter overall for Bank of Montreal, so I think its stock has responded correctly by rising over 5%. I also think this could be the start of a sustained rally higher, because the stock still trades at inexpensive valuations and because it has a very high dividend yield with a track record of increasing its payment, which will continue to attract investors.

First, Bank of Montreal’s stock trades at just 10.4 times fiscal 2015’s estimated earnings per share of $6.71 and only 9.9 times fiscal 2016’s estimated earnings per share of $7.02, both of which are inexpensive compared with its five-year average price-to-earnings multiple of 11.6 and the industry average multiple of 11.9. It also trades at a mere 1.26 times it book value per share of $55.36, which is very inexpensive compared with its market-to-book value of 1.74 at the conclusion of the year-ago period.

Second, Bank of Montreal pays an annual dividend of $3.28 per share, which gives its stock a 4.7% yield at today’s levels. The company has also increased its dividend for four consecutive years, and its increased amount of free cash flow could allow this streak to continue for the next several years.

With all of the information above in mind, I think Bank of Montreal represents one of the best long-term investment opportunities in the financial sector today. All Foolish investors should take a closer look and strongly consider making it a core holding.

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Fool contributor Joseph Solitro has no position in any stocks mentioned.