Head-To-Head Comparison: Bank of Nova Scotia (The) (NYSE:BNS) and Commerce Bancshares (CBSH)

Commerce Bancshares (NASDAQ: CBSH) and Bank of Nova Scotia (The) (NYSE:BNS) are both mid-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, institutional ownership, risk, dividends, earnings, profitability and analyst recommendations.

Analyst Recommendations

This is a summary of recent recommendations for Commerce Bancshares and Bank of Nova Scotia (The), as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Commerce Bancshares 3 5 0 0 1.63
Bank of Nova Scotia (The) 0 1 10 0 2.91

Commerce Bancshares presently has a consensus price target of $53.57, indicating a potential downside of 1.43%. Bank of Nova Scotia (The) has a consensus price target of $75.38, indicating a potential upside of 23.10%. 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 Commerce Bancshares.

Earnings and Valuation

This table compares Commerce Bancshares and Bank of Nova Scotia (The)’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Commerce Bancshares $1.15 billion 4.80 $280.24 million $2.76 19.71
Bank of Nova Scotia (The) $19.36 billion 3.80 $5.76 billion $4.79 12.78

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

Profitability

This table compares Commerce Bancshares and Bank of Nova Scotia (The)’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Commerce Bancshares 23.79% 12.01% 1.15%
Bank of Nova Scotia (The) 22.17% 14.45% 0.87%

Institutional and Insider Ownership

61.4% of Commerce Bancshares shares are owned by institutional investors. Comparatively, 50.1% of Bank of Nova Scotia (The) shares are owned by institutional investors. 4.3% of Commerce Bancshares shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

Commerce Bancshares pays an annual dividend of $0.90 per share and has a dividend yield of 1.7%. Bank of Nova Scotia (The) pays an annual dividend of $2.25 per share and has a dividend yield of 3.7%. Commerce Bancshares pays out 32.6% of its earnings in the form of a dividend. Bank of Nova Scotia (The) pays out 47.0% 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. Bank of Nova Scotia (The) has raised its dividend for 48 consecutive years. Bank of Nova Scotia (The) is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Commerce Bancshares has a beta of 0.81, indicating that its share price is 19% less volatile than the S&P 500. Comparatively, Bank of Nova Scotia (The) has a beta of 1.26, indicating that its share price is 26% more volatile than the S&P 500.

Summary

Bank of Nova Scotia (The) beats Commerce Bancshares on 10 of the 17 factors compared between the two stocks.

About Commerce Bancshares

Commerce Bancshares, Inc. is a bank holding company of Commerce Bank (the Bank). The Bank is engaged in general banking business, providing a range of retail, mortgage banking, corporate, investment, trust and asset management products and services to individuals and businesses. The Company operates through three segments: Consumer, Commercial and Wealth. The Consumer segment includes the consumer portion of the retail branch network (loans, deposits and other personal banking services), indirect and other consumer financing, and consumer debit and credit bank cards. The Commercial segment provides corporate lending, leasing, international services, and business, government deposit, and related commercial cash management services, as well as merchant and commercial bank card products. The Wealth segment provides traditional trust and estate tax planning, advisory and discretionary investment management, and brokerage services, and includes the Private Banking product portfolio.

About Bank of Nova Scotia (The)

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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