The Bank of Nova Scotia (BNS): Profit Beat Expecations

Company Profile:

The Bank of Nova Scotia provides various personal, commercial, corporate, and investment banking services in Canada and internationally. The company provides financial advice, solutions, and day-to-day banking products, including debit cards, checking accounts, credit cards, investments, mortgages, loans, and related creditor insurance products to individuals and small businesses; and commercial banking solutions, including lending, deposit, cash management, and trade finance solutions to medium and large businesses primarily through a network of 1,040 branches and 3,942 automated banking machines. The Bank of Nova Scotia was founded in 1832 and is based in Toronto, Canada.

Recent News:

The Bank of Nova Scotia’s fiscal second-quarter profit beat analyst expectations. Net income in the quarter through April 30 was C$1.8 billion, or C$1.42 per share, compared with C$1.8 billion, or C$1.39 per share, a year ago. Excluding special items, earnings were C$1.43.

It announced a dividend on the outstanding shares of the Bank for the quarter ending July 31, 2015, as follows, payable on July 29, 2015 to shareholders of record at the close of business on July 7, 2015.

The Toronto Stock Exchange (“TSX”) and the Office of the Superintendent of Financial Institutions (“OSFI”) have approved its normal course issuer bid to purchase up to 24 million of its Common Shares. This represents approximately two per cent of the 1,209,986,677 Common Shares issued and outstanding as of May 25, 2015.

Fundemental Analysis:

Ninestocks analyzes several different financial aspects: Growth, Profitability, solvency and efficiency.

Growth – Measures the growth of both the company’s income statement and cash flow.

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Profitability – Measures the historical price movement of the stock.

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Solvency – Measures the solvency of the company based on several ratios.

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Efficiency – Measures the strength and historic growth of a company’s return on invested capital.

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Conclusion:

BNS’s strengths can be seen in its better profitability and better efficiency. Its fiscal 2015 second-quarter profit beat analyst expectations. Technical indicators signal the bullish signs, as there is a bullish cross in MACD and Stochastic Oscillator. RSI is increasing to 44.89. The current P/E ratio indicates it is undervalued compared to the average P/E ratio of the industry and the sector. We rate The Bank of Nova Scotia (BNS) a STRONG BUY.