The Bank of Nova Scotia (NYSE:BNS) and Banco Bradesco (NYSE:BBD) are both large-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, risk, earnings, profitability, valuation and dividends.
Volatility & Risk
The Bank of Nova Scotia has a beta of 0.97, suggesting that its stock price is 3% less volatile than the S&P 500. Comparatively, Banco Bradesco has a beta of 1.05, suggesting that its stock price is 5% more volatile than the S&P 500.
Profitability
This table compares The Bank of Nova Scotia and Banco Bradesco's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| The Bank of Nova Scotia | 15.57% | 10.47% | 0.59% |
| Banco Bradesco | 15.08% | 14.39% | 1.32% |
Analyst Recommendations
This is a breakdown of recent ratings and price targets for The Bank of Nova Scotia and Banco Bradesco, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| The Bank of Nova Scotia | 2 | 1 | 7 | 0 | 2.50 |
| Banco Bradesco | 0 | 1 | 4 | 0 | 2.80 |
The Bank of Nova Scotia presently has a consensus price target of $72.5040, suggesting a potential upside of 18.47%. Banco Bradesco has a consensus price target of $5.75, suggesting a potential upside of 28.64%. Given Banco Bradesco's stronger consensus rating and higher probable upside, analysts clearly believe Banco Bradesco is more favorable than The Bank of Nova Scotia.
Earnings & Valuation
This table compares The Bank of Nova Scotia and Banco Bradesco's top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| The Bank of Nova Scotia | $32.52 billion | 2.28 | $5.04 billion | $3.99 | 15.34 |
| Banco Bradesco | $32.38 billion | 1.22 | $5.72 billion | $0.71 | 6.30 |
Banco Bradesco has lower revenue, but higher earnings than The Bank of Nova Scotia. Banco Bradesco is trading at a lower price-to-earnings ratio than The Bank of Nova Scotia, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
45.9% of The Bank of Nova Scotia shares are held by institutional investors. Comparatively, 2.1% of Banco Bradesco shares are held by institutional investors. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Dividends
The Bank of Nova Scotia pays an annual dividend of $2.83 per share and has a dividend yield of 4.6%. Banco Bradesco pays an annual dividend of $0.04 per share and has a dividend yield of 0.9%. The Bank of Nova Scotia pays out 70.9% of its earnings in the form of a dividend. Banco Bradesco pays out 5.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. The Bank of Nova Scotia has increased its dividend for 1 consecutive years. The Bank of Nova Scotia is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Summary
The Bank of Nova Scotia beats Banco Bradesco on 9 of the 16 factors compared between the two stocks.
