BNS Investment Analysis Report & Stock Research, The Bank of Nova Scotia

The Bank of Nova Scotia (BNS)

BNS Stock Report

2-Year Price History

View Larger BNS Chart
(10/21 2:46PM)
Open$44.24 Mkt Cap$45.3 Billion
High$44.98 52Wk High$46.13
Low$44.16 52Wk Low$19.24
Volume263,964 Avg Vol 10D331,000

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BNS Revenue

As a value investing shop, we are interested in seeing how BNS’s revenues measure up against past performances. One easily understandable way of doing that is to compare Price to Sales per share levels over a given time frame. Assuming it is available, Ockham prefers to look at ten years of history (for this stock there are 9 years of history available) and we weigh recent years more heavily. This allows us to find weighted average historical high and low Price to Sales ratios, which give us a better idea of the stock’s current underlying value. Using this method, we have established a high range for Price to Sales of 2.92x and the low end of the range at 1.82x.

With respect to these historically rational metrics, notice that the current Price to Sales per share ratio for BNS of 2.13x is below its historical average only slightly. So, while not a huge positive for our analysis, we do feel it is worth noting that BNS does look a bit undervalued on a Price to Sales basis, all other factors being equal. However, if the Price to Sales ratio drops further, Ockham Research is likely to become more bullish on this stock.

BNS Cash Earnings

As a value investment framework, Ockham Research is similar to a private equity firm in terms of our valuation methods. We are always on the lookout for value in the form of sales and cash numbers. In the case of BNS, Ockham views their current Cash Earnings as above their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for BNS, the current level of Cash Earnings compared to its historical levels helps identify where BNS is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 22.00 and a historical low Cash Earnings per share ratio of 13.10, an investor can relate where value becomes optimal.

Given this range of ratios per share, BNS at its current price of $44.94 and a Price to Cash Earnings ratio of 19.54 is 11% above its average historical Price to Cash Earnings ratio. Obviously this makes us more hesitant about BNS because cash earnings would need to rise to improve the valuation. Likewise, a decline in Price to Cash Earnings to below the average of 17.55 would significantly improve our outlook for BNS given the current profit levels.

BNS Dividends

When determining a company’s future prospects for success, Ockham Research sees analysis of dividend payments as a key additional factor. Even though it isn’t imperative for BNS to shell out a dividend in order to receive a positive rating, it can be helpful to further our analysis.

The estimated annual dividend for BNS is $1.81 producing a current dividend yield of 4.03%. Much like our evaluation of Sales and Cash Earnings per share, we review dividend yields from BNS against the historic high and low levels over all available dividend history. Because dividends are a decision made exclusively by management, we view a healthy and rising dividend as a sign of confidence and strength. The highest dividend yield from BNS over previous years was 9.41% while the lowest dividend yield was 1.77%. With that range in mind, BNS’s current dividend yield is a full 27.91% below its median dividend yield historically. This is a negative from our perspective.

Peer Comparison


The Bank of Nova Scotia Industry Grouping

Company Ticker Market Cap (Ml) Latest
Price/Cash Earnings Price/Sales 5-Yr. Rev.
Growth Rate
Avg. ROE.
Current 10-Yr. Range* Current 10-Yr. Range*
Peer Company Averages (not incuding BNS) 21.87 6.32 » 30.27 1.97 0.83 » 3.81 15.36% 18.64%
*10 year range does not include current year values
Toronto Dominion Bank TD $53.1 Billion $62.17 20.61 8.24 » 29.46 2.49 0.95 » 2.82 12.81% 17.82%
Barclays PLC ADR BCS $49.8 Billion $23.81 7.97 0.90 » 17.38 0.85 0.10 » 2.26 13.04% 18.98%
Westpac Banking Corp. WBK $45.9 Billion $121.05 15.17 5.60 » 17.90 1.76 1.21 » 4.05 24.38% 21.36%
US Bancorp USB $45.5 Billion $23.80 27.22 9.14 » 37.62 2.40 0.85 » 3.99 5.70% 20.94%
The Bank of Nova Scotia BNS $45.3 Billion $44.41 19.54 7.91 » 22.50 2.13 0.91 » 2.56 11.08% 20.42%
The Bank of New York Mellon Corp. BK $34.8 Billion $28.90 38.37 7.70 » 48.99 2.36 1.06 » 5.93 20.86% 14.12%

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The Latest Financial News
2:09:58 PM BNS $44.27 The Bank of Nova Scotia
9/21/2009 2:09 PM
“…recent revolving agreement syndicate. The kitchen sink is suspiciously present, although the most happy will undoubtedly be Bank Of America, RBS and BANK OF NOVA SCOTIA who can get repaid at par on yet another potentially shaky investment.In the current banana market, one should now fully expect at least 50 upgrades on the stock coming from all the banks on the list. Can’t have market conditions turning unfavorable to yet another pump and dump …” – BNS on Zero Hedge
11:37:47 AM BNS $41.66 The Bank of Nova Scotia
9/8/2009 11:37 AM
“…That don’t have as much exposure to commercial real estate, credit cards. >> like? >> I would avoid them. >> which ones in particular, matt? >> we like northern trust. It’s a regional bank. We also owned BANK OF NOVA SCOTIA scotia, which has a 43 yield. The bottom line is I would avoid some of these t.A.R.P. Entities. The curve does help, but I think it’s already helped and it’s time to move your profits and go to some other stocks that haven’t had their pop yet. >> you mentioned as a throw away, but it’s important, some regulatory problems coming down are those negatives? How big? >> the well capitalized, tier …” – BNS on The Call
11:29:25 AM BNS $43.25 The Bank of Nova Scotia
8/27/2009 11:29 AM
“…A great bank, just paid their warrants out today, never cut its dividend, and I like its trust and advisory business and plus lends to people who don’t need the money, larry. So strong credit quality, great franchise, a safe way to play in we also like BANK OF NOVA SCOTIA, a bank we own, international, has zero subprime exposure to the u.S., has a healthy yield. We like dividends in general, one of the areas that people have frankly ignored in this market environment, and if the market rotates, it’s going to rotate to dividend-seeking names. >> jeff, have you got a different list there? >> i’ve kind of gone from having a number of buys to an awful lot of holds. One of the names i’m pushing people toward today is I think — a lot of the what I would call high-quality names got through the cycle pretty well. I think northern trust is one of goldman sachs, jpmorgan. …” – BNS on The Call
View All The Bank of Nova Scotia News

Key Fundamentals

BNS – The Bank of Nova Scotia Fundamentals
Price (10/21 2:46PM) $44.74
Volume (10/21 2:46PM) 263,964
Last Close Price $44.41
10 Day Average Volume 331,000
13 Week Price Range $38.82 – $46.13
52 Week Price Range $19.24 – $46.13
LTM Revenue $21.5 Billion
Shares Outstanding (10/2008) 1.0 Billion
Market Capitalization $45.3 Billion
Shares Held By Institutions 574.2 Million
Institutional Holders 363
% Shares Held By Institutions 57.90%
Earnings Per Share (EPS) $2.54
P/E Ratio 19.10
Book Value Per Share $17.85
Gross Margin n/a%
Annual Dividend 1.81
Dividend Yield 4.10%
Beta 1.27
Fiscal Year Ends October

About The Bank of Nova Scotia

The Bank of Nova Scotia is considered to operate in the Financial sector. They specifically operate in the Money Center Banks business segment contained within the Banking industry.

The Bank and its affiliates offers a range of products and services, including retail, commercial, corporate and investment banking customers in some 50 countries around the world.