Bank of Nova Scotia (NYSE:BNS – Get Free Report) and NatWest Group (NYSE:NWG – Get Free Report) are both large-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their profitability, valuation, risk, dividends, institutional ownership, analyst recommendations and earnings.
Institutional and Insider Ownership
49.1% of Bank of Nova Scotia shares are owned by institutional investors. Comparatively, 1.3% of NatWest Group shares are owned by institutional investors. 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
Bank of Nova Scotia pays an annual dividend of $3.16 per share and has a dividend yield of 3.9%. NatWest Group pays an annual dividend of $1.21 per share and has a dividend yield of 7.5%. Bank of Nova Scotia pays out 65.7% of its earnings in the form of a dividend. NatWest Group pays out 64.4% 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 has raised its dividend for 14 consecutive years. NatWest Group is clearly the better dividend stock, given its higher yield and lower payout ratio.
Analyst Ratings
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Bank of Nova Scotia | 0 | 3 | 2 | 0 | 2.40 |
| NatWest Group | 0 | 4 | 1 | 1 | 2.50 |
Bank of Nova Scotia presently has a consensus target price of $106.00, suggesting a potential upside of 32.47%. Given Bank of Nova Scotia’s higher possible upside, equities analysts clearly believe Bank of Nova Scotia is more favorable than NatWest Group.
Valuation & Earnings
This table compares Bank of Nova Scotia and NatWest Group”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Bank of Nova Scotia | $52.70 billion | 1.87 | $5.56 billion | $4.81 | 16.64 |
| NatWest Group | $38.91 billion | 1.65 | $7.69 billion | $1.88 | 8.56 |
NatWest Group has lower revenue, but higher earnings than Bank of Nova Scotia. NatWest Group is trading at a lower price-to-earnings ratio than Bank of Nova Scotia, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Bank of Nova Scotia and NatWest Group’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Bank of Nova Scotia | 12.40% | 12.49% | 0.67% |
| NatWest Group | 19.11% | 13.30% | 0.78% |
Risk & Volatility
Bank of Nova Scotia has a beta of 1.13, suggesting that its share price is 13% more volatile than the S&P 500. Comparatively, NatWest Group has a beta of 0.94, suggesting that its share price is 6% less volatile than the S&P 500.
Summary
Bank of Nova Scotia beats NatWest Group on 9 of the 17 factors compared between the two stocks.
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.
About NatWest Group
NatWest Group plc, together with its subsidiaries, provides banking and financial products and services to personal, commercial, corporate, and institutional customers in the United Kingdom and internationally. It operates through Retail Banking, Private Banking, and Commercial & Institutional segments. The Retail Banking segment offers a range of banking products and related financial services, such as current accounts, mortgages, personal unsecured lending, and personal deposits, as well as mobile and online banking services. The Private Banking segment provides private banking and wealth management products for high-net-worth individuals and their business interests. The Commercial & Institutional segment offers banking and financial solutions to large corporate organisations, multi-nationals, and financial institutions. The company was formerly known as The Royal Bank of Scotland Group plc and changed its name to NatWest Group plc in July 2020. NatWest Group plc was founded in 1727 and is headquartered in Edinburgh, the United Kingdom.
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