Bank of Nova Scotia (BNS) and Its Competitors Critical Review

Bank of Nova Scotia (NYSE:BNS) is one of 920 publicly-traded companies in the “Banks” industry, but how does it contrast to its peers? We will compare Bank of Nova Scotia to related companies based on the strength of its risk, profitability, valuation, dividends, earnings, analyst recommendations and institutional ownership.

Institutional and Insider Ownership

49.1% of Bank of Nova Scotia shares are owned by institutional investors. Comparatively, 47.8% of shares of all “Banks” companies are owned by institutional investors. 9.8% of shares of all “Banks” companies are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent ratings for Bank of Nova Scotia and its peers, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bank of Nova Scotia	0	4	5	1	2.70
Bank of Nova Scotia Competitors	7458	30171	27726	1451	2.35

Bank of Nova Scotia presently has a consensus price target of $105.50, indicating a potential upside of 12.17%. As a group, “Banks” companies have a potential upside of 16.13%. Given Bank of Nova Scotia’s peers higher possible upside, analysts plainly believe Bank of Nova Scotia has less favorable growth aspects than its peers.

Dividends

Bank of Nova Scotia pays an annual dividend of $3.20 per share and has a dividend yield of 3.4%. Bank of Nova Scotia pays out 57.9% of its earnings in the form of a dividend. As a group, “Banks” companies pay a dividend yield of 9.4% and pay out 28.9% of their earnings in the form of a dividend. Bank of Nova Scotia has increased its dividend for 14 consecutive years. Bank of Nova Scotia lags its peers as a dividend stock, given its lower dividend yield and higher payout ratio.

Valuation & Earnings

This table compares Bank of Nova Scotia and its peers top-line revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Bank of Nova Scotia	$52.70 billion	$5.56 billion	17.01
Bank of Nova Scotia Competitors	$54.70 billion	$2.41 billion	16.82

Bank of Nova Scotia’s peers have higher revenue, but lower earnings than Bank of Nova Scotia. Bank of Nova Scotia is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Risk and Volatility

Bank of Nova Scotia has a beta of 1.14, meaning that its share price is 14% more volatile than the S&P 500. Comparatively, Bank of Nova Scotia’s peers have a beta of 0.61, meaning that their average share price is 39% less volatile than the S&P 500.

Profitability

This table compares Bank of Nova Scotia and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bank of Nova Scotia	13.91%	16.12%	0.72%
Bank of Nova Scotia Competitors	15.72%	9.53%	0.93%

Summary

Bank of Nova Scotia peers beat Bank of Nova Scotia on 8 of the 15 factors compared.

Bank of Nova Scotia Company Profile

The Bank of Nova Scotia provides various banking products and services in Canada, the United States, Mexico, Peru, Chile, Colombia, the Caribbean and Central America, and internationally. It operates through Canadian Banking, International Banking, Global Wealth Management, and Global Banking and Markets segments. The company offers financial advice and solutions, and banking products, including debit and credit cards, chequing and saving accounts, investments, mortgages, loans, and insurance to individuals; and retail automotive financing solutions. It also provides business banking solutions comprising lending, deposit, cash management, and trade finance solutions to small, medium, and large businesses. In addition, it provides wealth management advice and solutions, including online brokerage, mobile investment, full-service brokerage, trust, private banking, and private investment counsel services; and retail mutual funds, exchange traded funds, liquid alternatives, and institutional funds. The Bank of Nova Scotia was founded in 1832 and is headquartered in Toronto, Canada.