East West Bancorp (NASDAQ: EWBC) and Bank of Nova Scotia (The) (NYSE:BNS) are both mid-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, profitability, risk, analyst recommendations, dividends, earnings and institutional ownership.
East West Bancorp pays an annual dividend of $0.80 per share and has a dividend yield of 1.3%. Bank of Nova Scotia (The) pays an annual dividend of $2.53 per share and has a dividend yield of 3.9%. East West Bancorp pays out 22.9% of its earnings in the form of a dividend. Bank of Nova Scotia (The) pays out 52.1% 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.
This is a breakdown of recent ratings and recommmendations for East West Bancorp and Bank of Nova Scotia (The), as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|East West Bancorp||1||5||3||0||2.22|
|Bank of Nova Scotia (The)||0||1||9||0||2.90|
East West Bancorp presently has a consensus target price of $63.00, indicating a potential upside of 4.29%. Bank of Nova Scotia (The) has a consensus target price of $86.75, indicating a potential upside of 34.39%. Given Bank of Nova Scotia (The)’s stronger consensus rating and higher possible upside, analysts clearly believe Bank of Nova Scotia (The) is more favorable than East West Bancorp.
Volatility and Risk
East West Bancorp has a beta of 1.46, meaning that its stock price is 46% more volatile than the S&P 500. Comparatively, Bank of Nova Scotia (The) has a beta of 1.26, meaning that its stock price is 26% more volatile than the S&P 500.
Institutional and Insider Ownership
90.5% of East West Bancorp shares are held by institutional investors. Comparatively, 45.1% of Bank of Nova Scotia (The) shares are held by institutional investors. 0.9% of East West Bancorp shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
This table compares East West Bancorp and Bank of Nova Scotia (The)’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|East West Bancorp||34.63%||13.31%||1.34%|
|Bank of Nova Scotia (The)||22.26%||14.54%||0.89%|
Valuation and Earnings
This table compares East West Bancorp and Bank of Nova Scotia (The)’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|East West Bancorp||$1.22 billion||7.15||$504.25 million||$3.49||17.31|
|Bank of Nova Scotia (The)||$20.43 billion||3.79||$5.82 billion||$4.86||13.28|
Bank of Nova Scotia (The) has higher revenue and earnings than East West Bancorp. Bank of Nova Scotia (The) is trading at a lower price-to-earnings ratio than East West Bancorp, indicating that it is currently the more affordable of the two stocks.
East West Bancorp Company Profile
East West Bancorp, Inc. is a bank holding company. The Company’s principal business is to serve as a holding company for East West Bank (the Bank) and other banking or banking-related subsidiaries. The Bank is a California state-chartered bank, which operates in the United States and Greater China. The Bank provides a range of personal and commercial banking services to businesses, business executives, professionals, and other individuals. It operates through three segments: Retail Banking, Commercial Banking and Other. The Retail Banking segment focuses primarily on retail operations through the Bank’s branch network. The Commercial Banking segment primarily generates commercial and industrial (C&I) loans and commercial real estate (CRE) loans through the domestic commercial lending operations in California, New York, Texas, Washington, Massachusetts, Nevada and Georgia, and through the foreign commercial lending operations in China and Hong Kong.
Bank of Nova Scotia (The) Company Profile
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.
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