Is it a good company at a reasonable price? Although, it is a hard thing to do, if you are interested in owning this stock in the future, you should buy it while it is cheap. It may take time to recover, but it is cheap. In buying stock, you should buy low and sell high. However, a lot of people buy High (getting excited because the stock price is in a bull run) and then sell low (getting scared because the stock market is in a bear run). This stock has not been one of the best performing Canadian Banks, but it has mostly done fine. It has dividends and dividends are growing. It is currently cheap.
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.
When I was updating my spreadsheet, I noticed that his bank has a capital loss after 10 years. The other banks I have reviewed so far, all have capital gains after 10 years. See the chart below.
If you had invested in this company in December 2013, for $1,062.88 you would have bought 16 shares at $66.43 per share. In December 2023, after 10 years you would have received $534.72 in dividends. The stock would be worth $1,032.88. Your total return would have been $1,566.72. This is a total return would be a total return of 4.70% per year with 0.29% from capital gain and 4.99% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $66.43 | $1,062.88 | 16 | 10 | $534.72 | $1,032.00 | $1,566.72 |
If you had invested in this company in December 1993, for $1,003.46 you would have bought 131 shares at $7.66 per share. In December 2023, after 30 years you would have received $7,384.14 in dividends. The stock would be worth $8,449.50. Your total return would have been $15,833.64. This is a total return would be a total return of 13.41% per year with 7.36% from capital gain and 6.05% from dividends. This calculation takes into consideration stock splits, which means that the original cost would be lowered by these splits.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $7.66 | $1,003.46 | 131 | 30 | $7,384.14 | $8,449.50 | $15,833.64 |
The current dividend yield is good with dividend growth low. The current dividend yield is good (5% to 6% ranges) at 6.73%. The 5 year median dividend yield is also good at 5.23%. The 10 year and historical median dividend yields are moderate (2% to 4% ranges), at 4.76% and 4.22%. The dividend growth over the past 5 years was 5% per year. The last dividend increase was for 2023 and it was for 2.9%. This bank has in the past raised dividends more the once per year, but have not done that lately.
The Dividend Payout Ratios (DPR) are fine. The DPR for 2023 for Earnings per Share (EPS) is fine at 72% with 5 year coverage at 57%. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is fine at 64% with 5 year coverage at 55%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 16% with 5 year coverage at 28%. The DPR for 2023 for Free Cash Flow (FCF) is good at 17.33% with 5 year coverage at 31%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 72.32% | 56.54% |
| AEPS | 63.91% | 54.69% |
| CFPS | 16.00% | 28.38% |
| FCF | 17.33% | 30.70% |
Debt Ratios are fine. The Long Term Debt/Covering Assets Ratio for 2023 is good at 0.76. The Liquidity Ratio for 2023 is a good at 1.51. The Debt Ratio for 2023 is fine for a bank at 1.06.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R A | 0.76 | 0.76 |
| Lg Term R | 13.97 | 12.37 |
| Intang/GW | 0.25 | 0.22 |
| Liquidity | 1.51 | 1.51 |
| Liq. + CF | 1.95 | 1.95 |
| Debt Ratio | 1.06 | 1.06 |
The Total Return per year is shown below for years of 5 to 38 to the end of 2023. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2018 | 5 | 4.97% | 4.59% | -1.06% | 5.65% |
| 2013 | 10 | 5.75% | 4.70% | -0.29% | 4.99% |
| 2008 | 15 | 5.32% | 10.69% | 4.50% | 6.19% |
| 2003 | 20 | 8.35% | 8.60% | 3.42% | 5.17% |
| 1998 | 25 | 9.84% | 10.99% | 5.51% | 5.48% |
| 1993 | 30 | 9.43% | 13.41% | 7.36% | 6.05% |
| 1988 | 35 | 9.23% | 15.39% | 8.55% | 6.85% |
| 1985 | 38 | 8.79% | 13.82% | 7.92% | 5.90% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 8.82, 10.71 and 11.78. The corresponding 10 year ratios are 9.30, 10.99 and 12.51. The current P/E Ratio is 9.72 based on a stock price of $62.96 and EPS of $6.48. The current P/E Ratios is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 8.47, 9.91 and 11.12. The corresponding 10 year ratios are 8.91, 10.61 and 11.82. The current P/AEPS Ratio is 9.72 based on a stock price of $62.96 and AEPS of $6.48. The current P/E Ratios is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $90.93. The 10-year low, median, and high median Price/Graham Price Ratios are 0.66, 0.80 and 0.95. The current P/GP Ratio is 0.69 based on a stock price of $62.96. The current P/E Ratios is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10-year median Price/Book Value per Share Ratio of 1.46. The current P/B Ratio is 1.11 based on a stock price of $62.96, Book Value of $68,853M and Book Value per Share of $56.71. The current ratio is 24% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I also have a Book Value per Share estimate for 2024 of $59.20. This implies a P/B Ratio is 1.06 with a stock price of $62.96 and Book Value of $71,871M. This current ratio is 27% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10-year median Price/Cash Flow per Share Ratio of 5.11. The current P/CF Ratio is 2.41 based on Cash Flow for the last 12 months of $31,724M, Cash Flow per Share of $26.13 and a stock price of $62.92. This P/CF Ratio is 53% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. However, analysts mostly ignore cash flow for banks.
I get an historical median dividend yield of 4.22%. The current dividend yield is 6.73% based on dividends of $4.24 and a stock price of $62.92. The current dividend yield is 60% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 4.76%. The current dividend yield is 6.73% based on dividends of $4.24 and a stock price of $62.92. The current dividend yield is 42% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 2.93. The current P/S Ratio is 2.93 based on Revenue estimate for 2024 of $33,585M, Revenue per Share of $27.66 and a stock price of $62.92. The current ratio is 22% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing is that the stock price is probably cheap. Both the dividend yield tests say this. It is also confirmed by the P/S Ratio test. Other tests say that the stock price is either cheap or reasonable.
When I look at analysts’ recommendations, I find Buy (1), Hold (10) and Underperform (1). The consensus would be a Hold. The 12 months stock price consensus is $64.55 with a high of $70.00 and low of $58.00. The consensus stock price of $64.55 implies a total return of 9.26% with 2.53% from capital gains and 6.73% from dividends.
Some analysts think that this stock on Stock Chase is a buy, but others do not. Andrew Walker on Motley Fool thinks this bank will do better with their new CEO. Joey Frenette on Motley Fool thinks this stock has great value. The company put out a press release on Newswire about their 2023 year end results.
Simply Wall Street via Yahoo Finance reports on this company and do not find it appealing. Simply Wall Street gives this stock 4 stars out of 5. They list no risk factors.
Bank of Nova Scotia is a global financial services provider. The bank has five business segments: Canadian banking, international banking, global wealth management, global banking, and markets, and other. The bank's international operations span numerous countries and are more concentrated in Central and South America. Its web site is here Bank of Nova Scotia.
The last stock I wrote about was about was Toronto Dominion Bank (TSX-TD, NYSE-TD) ... learn more. The next stock I will write about will be National Bank of Canada (TSX-NA, OTC-NTIOF) ... learn more on Wednesday, January 17, 2024 around 5 pm. Tomorrow on my other blog I will write about Motherhood Penalty .... learn more on Tuesday, January 18, 2024 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. 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.
See my site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
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