Wednesday, December 30, 2009

Bank of Nova Scotia 2

I am continuing my review of the Bank of Nova Scotia (TSX-BNS). I follow this bank, but I have not invested in it. The reason I have not invested in this bank is that I already have enough bank investments with Bank of Montreal, TD Bank and Royal Bank. I think this is also a great bank.

As with my review of the other banks, insider selling is very high. In this bank, there is some insider buying, but little of it. All the insiders have far more stock options than shares. The insider selling is at $47.7M and the insider buying is at $1.3M. This bank has the lowest percentage of insider selling at .09% of the market cap of this stock. These banks certainly do not give potential buyers of their stock any good feelings about their stock when they are so busy dumping their shares.

When looking at P/E ratios, I find that the 5 year average low is 11 and the 5 year average high is 14.7. There is not much of a spread here in these ratios. The P/E Ratio I get for 2010 is 13.7. Sites that show a P/E based on last 12 months earnings get a higher P/E of 15. None of these P/E ratios are particularly low or high. So, we do not learn much from this.

When I look at the dividend yield, I get a current yield of 3.9% and the 5 year average is 4%. This is very close, but it is not telling you that the price is good. When I look at the Price/Book value, I find the current ratio is about 90% of the 10 year average. A good price signal is if the current ratio is 80% or less of the 10 year average. The last thing to look at is the Graham Price. I get a Graham Price for 2010 of $44.12 and the current price is some 10% above this. So, I find that none of the above point to a good current price. However, none of this point to an unreasonably high price neither.

When I look at Analysts recommendations, I find that they range from Strong Buy to Underperform. There are no sell recommendations on this stock. There are a lot of analysts following this stock and the vast majority of the recommendations are a Hold. The next highest recommendation is a Buy. The consensus would be a Hold. (See my site for information on analyst ratings.) The analysts giving this stock a buy, feels that this will be the first Canadian Bank to recover from the current crisis. The Holds feel that the price is a little high.

As I had said before, I do not intend to buy this stock personally, as I already have enough bank stocks. I certainly follow it because I may want to buy it in the future as I feel this is good, well run Canadian Bank. I think that the current price is a reasonable one. My only concern and I have this will all the banks, is the large amount of insider selling going on.

The Bank of Nova Scotia is a bank. They offer personal and corporate banking and wealth management services in Canada and US, which includes looking after banking, financing, investing, credit card and insurance needs. They offer mortgages and mutual funds and they offer full service and on-line brokerage services. It is an international bank having banking in Canada and some 40 other countries around the world in the geographic regions of the Caribbean and Central America, Mexico, Latin America and Asia. Its web site is See my spreadsheet at

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at

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