Friday, December 10, 2010

Bank of Nova Scotia 2

This is a bank (TSX-BNS) that I follow, however, I do not own of stock in this bank. I track this bank, as it is a bank that is thought a good investment. The only reason I do not own it is that I already own too much in the financial sector.

I looked at the Insider Trading reports and find that there is a lot of selling of this bank by insiders, just as there was by TD Bank. The net insider selling is $74.9M. There is not enough insider buying to even talk about. All this selling seems to be of options. The problem, of course, is that insider selling does not really tell you anything.

When I look at the Price/Earnings Ratio, I find that the 5 year median low P/E is 11.8 and the 5 year median high P/E is 14.2. I get a current P/E of 12.4, which is neither particularly low nor high. The current Graham Price I get is $47.75, so the current stock price of $55.30 is some 16% above this. The difference has been greater in the past, but also, usually sometime during the year, the stock price has been at or below the Graham Price at some point.

Looking at the Price/Book Value Ratio, I get a 10 year average of 2.40 and a current P/B ratio of 2.44. So, these ratios are about the same. The last thing is the dividend yield. I get a current one of 3.5% and a 5 year average of 4%. All these measures show a slightly high current stock price comparatively for this stock.

When I look at what the analysts’ are recommending, I see lots of Strong Buy, Buy and Hold recommendations. There is also one Underperform and one Sell recommendation. The consensus recommendation would be a Buy. (See my site for information on analyst ratings.) The 12 month target price is about $58 to $64.

Some like this bank as it has banking exposure to the Caribbean and the Far East, rather than in the US. Some analysts currently favor other banks, like the TD and BMO rather than BNS. Some analysts think that this will be the first of the big 5 banks to increase their dividends.

I will not be buying this bank for the simple reason that I already have too much exposure to the financial sector of the stock market.

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 here BNS. See my spreadsheet at bns.htm.

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 for stocks followed and investment notes. Follow me on twitter.

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