Comparing Bank of Nova Scotia (NYSE:BNS) & Lake Shore Bancorp (NASDAQ:LSBK)

Bank of Nova Scotia (NYSE:BNS) and Lake Shore Bancorp (NASDAQ:LSBK) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, valuation, profitability, analyst recommendations, institutional ownership, risk and dividends.

Dividends

Bank of Nova Scotia pays an annual dividend of $3.21 per share and has a dividend yield of 3.5%. Lake Shore Bancorp pays an annual dividend of $0.36 per share and has a dividend yield of 2.0%. Bank of Nova Scotia pays out 58.0% of its earnings in the form of a dividend. Lake Shore Bancorp pays out 31.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Bank of Nova Scotia has increased its dividend for 14 consecutive years. Bank of Nova Scotia is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Bank of Nova Scotia and Lake Shore Bancorp”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bank of Nova Scotia	$52.70 billion	2.09	$5.56 billion	$5.53	16.40
Lake Shore Bancorp	$39.56 million	3.66	$7.27 million	$1.13	16.30

Bank of Nova Scotia has higher revenue and earnings than Lake Shore Bancorp. Lake Shore Bancorp is trading at a lower price-to-earnings ratio than Bank of Nova Scotia, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Bank of Nova Scotia has a beta of 1.14, suggesting that its stock price is 14% more volatile than the S&P 500. Comparatively, Lake Shore Bancorp has a beta of 0.3, suggesting that its stock price is 70% less volatile than the S&P 500.

Profitability

This table compares Bank of Nova Scotia and Lake Shore Bancorp’s 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%
Lake Shore Bancorp	20.74%	5.91%	1.15%

Insider & Institutional Ownership

49.1% of Bank of Nova Scotia shares are held by institutional investors. Comparatively, 8.7% of Lake Shore Bancorp shares are held by institutional investors. 8.4% of Lake Shore Bancorp shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current recommendations for Bank of Nova Scotia and Lake Shore Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bank of Nova Scotia	0	2	4	1	2.86
Lake Shore Bancorp	0	0	0	1	4.00

Bank of Nova Scotia currently has a consensus price target of $117.00, indicating a potential upside of 29.02%. Given Bank of Nova Scotia’s higher possible upside, research analysts clearly believe Bank of Nova Scotia is more favorable than Lake Shore Bancorp.

Summary

Bank of Nova Scotia beats Lake Shore Bancorp on 11 of the 17 factors compared between the two stocks.

About Bank of Nova Scotia

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.

About Lake Shore Bancorp

Lake Shore Bancorp, Inc. operates as a savings and loan holding company for Lake Shore Servings Bank. It offers personal services such as checking, savings, lending, banking, debit card, e-services, and online banking; and business services including deposit products, commercial loans, and business e-statements. The company was founded in 2006 and is headquartered in Dunkirk, NY.