Head to Head Survey: Bank of Nova Scotia (BNS) vs. HSBC (HSBC)

Bank of Nova Scotia (NYSE: BNS) and HSBC (NYSE:HSBC) are both large-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, risk, profitability, dividends, earnings and analyst recommendations.

Earnings & Valuation

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This table compares Bank of Nova Scotia and HSBC’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Bank of Nova Scotia $28.86 billion 2.60 $6.12 billion $5.25 11.93
HSBC $53.82 billion 3.68 $9.77 billion $1.40 35.31

HSBC has higher revenue and earnings than Bank of Nova Scotia. Bank of Nova Scotia is trading at a lower price-to-earnings ratio than HSBC, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Bank of Nova Scotia and HSBC’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Bank of Nova Scotia 22.69% 14.78% 0.91%
HSBC N/A 4.13% 0.32%

Analyst Ratings

This is a summary of recent recommendations and price targets for Bank of Nova Scotia and HSBC, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Bank of Nova Scotia 0 0 7 0 3.00
HSBC 1 8 3 0 2.17

Bank of Nova Scotia currently has a consensus price target of $90.00, suggesting a potential upside of 43.70%. HSBC has a consensus price target of $9.00, suggesting a potential downside of 81.80%. Given Bank of Nova Scotia’s stronger consensus rating and higher possible upside, equities analysts plainly believe Bank of Nova Scotia is more favorable than HSBC.

Insider and Institutional Ownership

47.4% of Bank of Nova Scotia shares are held by institutional investors. Comparatively, 2.4% of HSBC shares are held by institutional investors. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

Bank of Nova Scotia pays an annual dividend of $2.56 per share and has a dividend yield of 4.1%. HSBC pays an annual dividend of $4.20 per share and has a dividend yield of 8.5%. Bank of Nova Scotia pays out 48.8% of its earnings in the form of a dividend. HSBC pays out 300.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Risk & Volatility

Bank of Nova Scotia has a beta of 1.27, indicating that its stock price is 27% more volatile than the S&P 500. Comparatively, HSBC has a beta of 0.92, indicating that its stock price is 8% less volatile than the S&P 500.

Summary

Bank of Nova Scotia beats HSBC on 10 of the 15 factors compared between the two stocks.

About Bank of Nova Scotia

The Bank of Nova Scotia is an international bank and a financial services provider in North America, Latin America, the Caribbean and Central America, and Asia-Pacific. The Bank offers a range of advice, products and services, including personal and commercial banking, wealth management and private banking, corporate and investment banking, and capital markets. Its segments include Canadian Banking, which provides a suite of financial advice and banking solutions to retail, small business, commercial and wealth management customers in Canada; International Banking, which provides a range of financial products, solutions and advice to retail and commercial customers in select regions outside of Canada; Global Banking and Markets, which provides corporate banking, investment banking, capital markets and transaction banking solutions, and Other, which represents smaller operating segments, including Group Treasury.

About HSBC

HSBC Holdings plc (HSBC) is the banking and financial services company. The Company manages its products and services through four businesses: Retail Banking and Wealth Management (RBWM), Commercial Banking (CMB), Global Banking and Markets (GB&M), and Global Private Banking (GPB). It operates across various geographical regions, which include Europe, Asia, Middle East and North Africa, North America and Latin America. RBWM business offers Retail Banking, Wealth Management, Asset Management and Insurance. CMB services include working capital, term loans, payment services and international trade facilitation, among other services, as well as expertise in mergers and acquisitions, and access to financial markets. GB&M supports government, corporate and institutional clients across the world. GPB’s products and services include Investment Management, Private Wealth Solutions, and a range of Private Banking services.

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