Contrasting NatWest Group (NYSE:NWG) and Bank of Nova Scotia (NYSE:BNS)

NatWest Group (NYSE:NWG) and Bank of Nova Scotia (NYSE:BNS) are both large-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, valuation, profitability, institutional ownership, analyst recommendations, risk and dividends.

Insider and Institutional Ownership

1.3% of NatWest Group 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 endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

This table compares NatWest Group 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
NatWest Group	$38.91 billion	1.65	$7.69 billion	$1.88	8.55
Bank of Nova Scotia	$52.70 billion	1.86	$5.56 billion	$5.24	15.28

NatWest Group has higher earnings, but lower revenue 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 NatWest Group and Bank of Nova Scotia’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NatWest Group	19.11%	13.30%	0.78%
Bank of Nova Scotia	13.38%	13.16%	0.70%

Volatility and Risk

NatWest Group has a beta of 0.94, indicating that its stock price is 6% less volatile than the S&P 500. Comparatively, Bank of Nova Scotia has a beta of 1.13, indicating that its stock price is 13% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for NatWest Group and Bank of Nova Scotia, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NatWest Group	0	4	1	1	2.50
Bank of Nova Scotia	0	3	2	0	2.40

Bank of Nova Scotia has a consensus target price of $117.00, indicating a potential upside of 46.12%. Given Bank of Nova Scotia’s higher probable upside, analysts plainly believe Bank of Nova Scotia is more favorable than NatWest Group.

Dividends

NatWest Group pays an annual dividend of $1.21 per share and has a dividend yield of 7.5%. Bank of Nova Scotia pays an annual dividend of $3.16 per share and has a dividend yield of 3.9%. NatWest Group pays out 64.4% of its earnings in the form of a dividend. Bank of Nova Scotia pays out 60.3% 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.

Summary

Bank of Nova Scotia beats NatWest Group on 10 of the 17 factors compared between the two stocks.

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.

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.