Head-To-Head Comparison: Bank of Nova Scotia (NYSE:BNS) vs. National Australia Bank (OTCMKTS:NABZY)

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

Volatility & Risk

National Australia Bank has a beta of 1.25, meaning that its stock price is 25% more volatile than the S&P 500. Comparatively, Bank of Nova Scotia has a beta of 1.17, meaning that its stock price is 17% more volatile than the S&P 500.

Institutional and Insider Ownership

49.1% of Bank of Nova Scotia shares are held by institutional investors. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares National Australia Bank and Bank of Nova Scotia”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
National Australia Bank	$36.86 billion	2.36	$4.59 billion	N/A	N/A
Bank of Nova Scotia	$36.00 billion	2.29	$5.70 billion	$3.72	17.92

Bank of Nova Scotia has lower revenue, but higher earnings than National Australia Bank.

Analyst Recommendations

This is a summary of current ratings and price targets for National Australia Bank and Bank of Nova Scotia, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
National Australia Bank	2	0	0	0	1.00
Bank of Nova Scotia	0	5	4	0	2.44

National Australia Bank presently has a consensus price target of $38.00, suggesting a potential upside of 167.61%. Bank of Nova Scotia has a consensus price target of $86.00, suggesting a potential upside of 29.02%. Given National Australia Bank’s higher probable upside, equities analysts plainly believe National Australia Bank is more favorable than Bank of Nova Scotia.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
National Australia Bank	N/A	N/A	N/A
Bank of Nova Scotia	9.74%	11.61%	0.62%

Dividends

National Australia Bank pays an annual dividend of $0.51 per share and has a dividend yield of 3.6%. Bank of Nova Scotia pays an annual dividend of $3.16 per share and has a dividend yield of 4.7%. Bank of Nova Scotia pays out 84.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Bank of Nova Scotia has raised its dividend for 14 consecutive years. Bank of Nova Scotia is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Bank of Nova Scotia beats National Australia Bank on 9 of the 14 factors compared between the two stocks.

About National Australia Bank

National Australia Bank Limited provides financial services to individuals and businesses in Australia, New Zealand, and internationally. The company operates through Business and Private Banking; Personal Banking; Corporate and Institutional Banking; New Zealand Banking; and Corporate Functions and Other segments. It accepts transaction accounts, savings accounts, debit cards, and term deposits; and specialized accounts, such as foreign currency, business interest, cash maximiser, farm management, community free saver, statutory trust, and project bank accounts, as well as farm management deposits. In addition, the company provides home loans, personal loans, and business loans; vehicle and equipment finance; and trade and invoice finance, as well as business overdrafts and bank guarantees. Further, it offers insurance products consisting of home and content, landlord, travel, car, caravan and trailer, life, and business insurance products; and pension, self-managed super funds, cash management, and financial planning and advisory services. Additionally, the company provides investment products; credit, debit, and business cards; payments and merchant services; online and internet banking services; small business services; international and foreign exchange solutions; and industry specific banking services. The company was founded in 1834 and is based in Melbourne, Australia.

About Bank of Nova Scotia

The Bank of Nova Scotia provides various banking products and services in Canada, the United States, Mexico, Peru, Chile, Colombia, the Caribbean and Central America, and internationally. It operates through Canadian Banking, International Banking, Global Wealth Management, and Global Banking and Markets segments. The company offers financial advice and solutions, and banking products, including debit and credit cards, chequing and saving accounts, investments, mortgages, loans, and insurance to individuals; and retail automotive financing solutions. It also provides business banking solutions comprising lending, deposit, cash management, and trade finance solutions to small, medium, and large businesses. In addition, it provides wealth management advice and solutions, including online brokerage, mobile investment, full-service brokerage, trust, private banking, and private investment counsel services; and retail mutual funds, exchange traded funds, liquid alternatives, and institutional funds. The Bank of Nova Scotia was founded in 1832 and is headquartered in Toronto, Canada.