Analyzing First Bank (NASDAQ:FRBA) and Bank of Nova Scotia (NYSE:BNS)

First Bank (NASDAQ:FRBA) and Bank of Nova Scotia (NYSE:BNS) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, risk, analyst recommendations, profitability, dividends, valuation and earnings.

Valuation & Earnings

This table compares First Bank and Bank of Nova Scotia”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Bank	$120.30 million	2.51	$20.90 million	$1.59	9.69
Bank of Nova Scotia	$33.11 billion	1.99	$5.49 billion	$4.18	12.74

Bank of Nova Scotia has higher revenue and earnings than First Bank. First Bank 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 First Bank and Bank of Nova Scotia’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Bank	18.19%	11.80%	1.25%
Bank of Nova Scotia	9.84%	11.14%	0.57%

Risk and Volatility

First Bank has a beta of 0.94, meaning that its share price is 6% less volatile than the S&P 500. Comparatively, Bank of Nova Scotia has a beta of 1.05, meaning that its share price is 5% more volatile than the S&P 500.

Insider and Institutional Ownership

64.9% of First Bank shares are owned by institutional investors. Comparatively, 49.1% of Bank of Nova Scotia shares are owned by institutional investors. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

First Bank pays an annual dividend of $0.24 per share and has a dividend yield of 1.6%. Bank of Nova Scotia pays an annual dividend of $3.13 per share and has a dividend yield of 5.9%. First Bank pays out 15.1% of its earnings in the form of a dividend. Bank of Nova Scotia pays out 74.9% 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.

Analyst Recommendations

This is a summary of current recommendations for First Bank and Bank of Nova Scotia, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Bank	0	0	1	0	3.00
Bank of Nova Scotia	1	3	1	1	2.33

First Bank presently has a consensus price target of $17.00, indicating a potential upside of 10.32%. Bank of Nova Scotia has a consensus price target of $69.00, indicating a potential upside of 29.61%. Given Bank of Nova Scotia’s higher possible upside, analysts clearly believe Bank of Nova Scotia is more favorable than First Bank.

Summary

Bank of Nova Scotia beats First Bank on 8 of the 15 factors compared between the two stocks.

About First Bank

First Bank provides various banking products and services to small to mid-sized businesses and individuals. The company accepts various deposits, including non-interest-bearing demand deposits, interest bearing demand accounts, money market accounts, savings accounts, and certificates of deposit, as well as commercial checking accounts. It also offers various loan products comprising commercial and industrial loans, which include line of credit, inventory, equipment, and short-term working capital financing; commercial real estate loans, such as owner-occupied, investor, construction and development, and multi-family loans; residential real estate loans comprising residential mortgages, first and second lien home equity loans, and revolving lines of credit; and consumer and other loans consists of auto, personal, traditional installment, and other loans. The company also provides electronic banking services, including Internet and mobile banking, electronic bill payment, and banking by phone; ATM and debit cards, and wire and ACH transfer services; remote deposit capture; and cash management services, as well as engages in the capital markets activities. It operates full-service branches in Cinnaminson, Delanco, Denville, Ewing, Fairfield, Flemington, Hamilton, Lawrence, Monroe, Pennington, Randolph, Somerset, and Williamstown, New Jersey; Doylestown, Trevose, Warminster, and West Chester, Paoli, Malvern, Coventry, Devon, Lionville, and Glen Mills Pennsylvania; and Palm Beach, Florida. First Bank was incorporated in 2007 and is headquartered in Hamilton, New Jersey.

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.