Canadian banks continue to outperform their American rivals. This was reinforced again today when the Bank of Nova Scotia (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)