When taking a look at Bank of Nova Scotia’s historical dividend yield, you can see that it has been volatile:Īt 4.8%, the current yield is on the low end of the range, indicating that income-oriented investors are paying a slight premium relative to yields they have been able to receive in the past. BNS Has a Solid Dividendįor income-oriented investors, BNS pays a 4.8% dividend yield on an annualized basis. Now that I have my assumptions, I’ll plug them into the formulas, which are in Canadian Dollars:Īs a result, the Bank of Nova Scotia is currently worth C$120.66 per share under current market conditions. Growth Rate: 2.89% (used 30-year Government of Canada bond yield as a proxy for long-term growth expectations) We will use the following assumptions for our calculations:
Terminal Value = Excess Return / (Cost of Equity – Growth Rate)įair Value = Book Value Per Share + Terminal Value Here’s how it works:Įxcess Return = (Average ROE – Cost of Equity) x Book Value Per Share There are a few steps to follow for this valuation method.įirst, you calculate a company’s excess returns. The excess returns model allows us to use historical numbers instead, which are actual results.
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To value Bank of Nova Scotia, we will use the excess returns model, which is more appropriate for financial companies because they tend to have volatile free cash flows.Īs a result, trying to create forecasts for them is ineffective. Nevertheless, it may be undervalued at the moment despite bouncing after a rather large sell-off. Revenue was C$7.94 billion, which also beat the consensus by C$70 million.īNS’ share price is down roughly 4.8% year-to-date but up approximately 9.5% in the past year. Earnings per share came in at C$2.18, above analysts’ expectations of C$1.97. It operates through the following segments: Canadian Banking, International Banking, Global Banking and Markets, and Global Wealth Management.īNS recently reported earnings, which beat expectations. SWFI is a minority-owned organization.Bank of Nova Scotia ( TSE: BNS) ( BNS) provides financial products and services, including personal, commercial, corporate, and investment banking. SWFI facilitates sovereign fund, pension, endowment, superannuation fund and central bank events around the world. Sovereign Wealth Fund Institute (SWFI) is a global organization designed to study sovereign wealth funds, pensions, endowments, superannuation funds, family offices, central banks and other long-term institutional investors in the areas of investing, asset allocation, risk, governance, economics, policy, trade and other relevant issues.
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