Can The Bank of Nova Scotia (USA) (BNS) Avoid a Canadian Housing Bust?

Page 1 of 2

On Tuesday, The Bank of Nova Scotia (USA) (NYSE:BNS) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they’ll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you’ll be less likely to make an uninformed, kneejerk reaction to news that turns out to be exactly the wrong move.

The Bank of Nova Scotia (USA) (NYSE:BNS)Canadian banks came through the 2008 financial crisis with flying colors, as The Bank of Nova Scotia (USA) (NYSE:BNS) and its peers benefited from the more stable structural characteristics of the Canadian mortgage market. Yet while the housing market south of the border has retrenched to relative bargain-levels, Canadian real estate remains extremely expensive, especially in key markets. That has raised concerns of potential trouble ahead. Let’s take an early look at what’s been happening with The Bank of Nova Scotia over the past quarter and what we’re likely to see in its quarterly report.

Stats on Bank of Nova Scotia

Analyst EPS Estimate $1.26
Change From Year-Ago EPS 6.8%
Revenue Estimate $5.18 billion
Change From Year-Ago Revenue 16%
Earnings Beats in Past 4 Quarters 3

Source: Yahoo! Finance.

Can Bank of Nova Scotia keep growing this quarter?
Analysts have gotten more optimistic about The Bank of Nova Scotia (USA) (NYSE:BNS)’s earnings prospects in recent months, boosting their estimates for the April quarter by a penny per share and adding $0.04 to their full-year fiscal 2013 projections. The stock, meanwhile, has stayed in neutral recently, with a decline of about 1% since mid-February.

U.S. investors first became aware of the relative strength of Canadian banks during the U.S. financial crisis, but since then, they’ve realized the benefits of looking north of the border. Canada does have its own systemically important banks, which include not only The Bank of Nova Scotia (USA) (NYSE:BNS) but also Royal Bank of Canada (USA) (NYSE:RY), Bank of Montreal (USA) (NYSE:BMO), and three other large financial institutions, but high capital requirements have demonstrated their creditworthiness and relative safety.

Yet trouble could be brewing in the industry. Yesterday, Toronto-Dominion Bank (USA) (NYSE:TD) reported disappointing results for its most-recent quarter, with slowing loan growth in Canada despite having extensive U.S. operations that give it geographical diversity. Scotiabank also gets a substantial amount of business outside Canada’s borders, although the U.S. is only a small part of operations that extend throughout the Americas and Asia. Still, Canada represents more than half of The Bank of Nova Scotia (USA) (NYSE:BNS)’s revenue, and despite measures put in place by the Canadian government to protect the mortgage market, downgrades of Scotiabank as well as Bank of Montreal (USA) (NYSE:BMO), Toronto-Dominion Bank (USA) (NYSE:TD), Royal Bank of Canada (USA) (NYSE:RY), and several other Canadian banks from various credit agencies over the past year have made investors increasingly concerned about the state of the market.

Page 1 of 2

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!