BNS
The Bank of Nova Scotia
$79.78
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Overvalued
Trading 14.4% above fair value
You pay
$79.78
Bear
$48.81
Fair
$69.72
Bull
$90.64
Bear
$48.81
-38.8%
ROTCE 8.3% → 0.61x TBV
Fair
$69.72
-12.6%
ROTCE 11.0% → 1.01x TBV
Bull
$90.64
+13.6%
ROTCE 12.7% → 1.24x TBV
Key Value Driver
ROTCE (11.0%) vs. cost of equity (11.0%)
Implied Market Multiple
1.92x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $72.15 from 19 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $69.72 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Dividend-based valuation: $30.69 (55% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Financial statements were converted from CAD into USD using USDCAD at 0.7240 USD per CAD.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly