Bank of Nova Scotia

Sound bite for Twitter and StockTwits is: Div growth bank cheap. I have a hard time believing the 12 month consensus stock price, but I also have no idea what the market is going to do in the short term. However, I believe that you buy good stocks when they are cheap if you are a long term investor. This stock is cheap. See my spreadsheet on Bank of Nova Scotia.

I do not own this stock of Bank of Nova Scotia (TSX-BNS, NYSE-BNS). This is one of the big banks of Canada. All our big banks are dividend growth companies. Besides, my son owns shares in this bank.

This bank lately has had good dividends with the current and 5 year median dividend yield above 4%. The current dividend yield is 5.36% and the 5 year median dividend yield is 4.1%. The historical median dividend yield is more moderate at 3.86%.

The dividend growth is moderate. The dividend growth is 7% and 8.9% per year over the past 5 and 10 years. The last dividend increase was for 2.9% in 2015. However this bank also increases the dividend more than once in a year and the total dividend increase in 2015 was 6.25%. With the recent problems this bank only kept dividends flat for 2009 and 2010.

I think that the bank can afford the dividends. The Dividend Payout Ratio for EPS for 2015 was 48% and the 5 year median is 45%. The DPR for CFPS is 23% and the 5 year median is 32%.

The bank has had a number of years of negative cash flow, so it is hard to do much in the way of calculation on growth in cash flow or cash flow per share. Unfortunately, it is not unusual for banks for have negative cash flows from operations.

As far as debt ratios go, they are fine. The Debt Ratio is 1.07 and anything over 1.04 is fine for a bank. The Leverage and Debt/Equity Ratios for 2015 are 16.02 and 15.02 respectively. These are rather typical for a bank.

The 5 year low, medina and high median Price/Earnings per Share Ratios are 10.64, 11.63 and 12.50. The corresponding 10 year ratios are a bit higher at 10.71, 11.90 and 13.39. The current P/E Ratio is 8.84 based on a stock price of $52.27 and 2016 EPS estimate of $5.91. This stock price testing suggests that this bank is relatively cheap.

I get a Graham Price of $62.42. The 10 year low, medina and high median Price/Graham Price Ratios are 0.91, 1.02 and 1.21. This stock price testing also so that the stock is relatively cheap as the P/GP Ratio is 0.84.

When I look at analysts' recommendations, I find Strong Buy, Buy, Hold and Underperform recommendations. Most of the recommendations are a Hold and the consensus would be a Hold. The 12 month stock price consensus is $65.19. This implies a total return of 37.65% with 32.29% from capital gains and 5.39% from dividends.

Who know what the near future holds for this stock, but I believe that you buy good stocks when they are cheap if you want to invest for the long term. This stock is cheap.

In this recent article in the Financial Post, Barbara Shecter talks about the Bank of Nova Scotia forecasting double digit growth from their Mexican and South American operations. On Corvus Business Noah talks about recent analysts' recommendations on this stock. Adam Costello on The News Journal gives an analysis of this stock. He calls it a Top Stock of the Day for January 12, 2016.

I will have only one entry for this stock this year. However, I did a more complete report on this company in 2015 and you can see those reports here and here

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 Bank of Nova Scotia.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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