Canadian banks continue to outperform their American rivals. This was reinforced again today when the Bank of Nova Scotia (NYSE:BNS) again provided an impressive earnings report. This high yielding bank from north of the border offers a solid value proposition for income investors. I have been positive on this stock and have own these shares since last November when they were trading at just $46 a share.
Key earnings highlights for BNS:
- Earnings after adjustments came in at $1.69, much stronger than the $1.20 consensus estimate.
- Return on Equity for the quarter came in at an impressive 24.6%.
- The company again increased its dividend to 57 cents a share quarterly from 55 cents a share previously.
- Its Tier 1 ratio now stands at 12.6%.
"The Bank of Nova Scotia offers various personal, commercial, corporate, and investment banking services in Canada and internationally. It operates through four segments: Canadian Banking, International Banking, Global Wealth Management, and Scotia Capital." (Business description from Yahoo Finance)
4 reasons BNS offers solid value at just over $53 a share:
- The company sports an AA- rated balance sheet and yields 4.1%.
- Bank of Nova Scotia has now exceeded quarterly estimates for four of the last five quarters, and analysts expect steady revenue growth of 5% to 6% for both FY2012 and FY2013.
- The median price target by analysts on the shares is $65 a share. S&P also has a "buy" rating on the stock.
- The stock looks like it has bottomed over the last few months and crossed over its 200 day moving average earlier in August before earnings (See Chart)
Disclosure: I am long BNS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.