Critical Comparison: First Bank (NASDAQ:FRBA) & Bank of Nova Scotia (NYSE:BNS)

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

Volatility and Risk

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

Analyst Recommendations

This is a summary of recent ratings and target prices for Bank of Nova Scotia and First Bank, as provided by MarketBeat.

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

Bank of Nova Scotia presently has a consensus target price of $69.00, suggesting a potential upside of 27.99%. First Bank has a consensus target price of $17.00, suggesting a potential upside of 13.33%. Given Bank of Nova Scotia’s higher possible upside, research analysts plainly believe Bank of Nova Scotia is more favorable than First Bank.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bank of Nova Scotia	$52.53 billion	1.27	$5.49 billion	$4.18	12.90
First Bank	$173.30 million	1.69	$20.90 million	$1.59	9.43

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 Bank of Nova Scotia and First Bank’s net margins, return on equity and return on assets.

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

Dividends

Bank of Nova Scotia pays an annual dividend of $3.13 per share and has a dividend yield of 5.8%. First Bank pays an annual dividend of $0.24 per share and has a dividend yield of 1.6%. Bank of Nova Scotia pays out 74.9% of its earnings in the form of a dividend. First Bank pays out 15.1% 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.

Institutional & Insider Ownership

49.1% of Bank of Nova Scotia shares are owned by institutional investors. Comparatively, 64.9% of First Bank shares are owned by institutional investors. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Bank of Nova Scotia beats First Bank on 8 of the 15 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 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.