Bank of Nova Scotia Earnings Preview: Here’s What to Expect

Bank of Nova Scotia (BNS), Canada’s third-largest bank by total assets, will report its Q2 financial results on June 1 before the opening bell. Over the past year, the bank’s stock has jumped nearly 35% and is currently trading around C$81.00. Let’s have a look at what analysts are expecting, as solid earnings could drive BNS stock higher.

Analysts are expecting the Bank of Nova Scotia to post adjusted EPS of C$1.76 in the second quarter of 2021, indicating growth of 69.2% from the prior-year quarter (C$1.04 per share). Estimated revenue of C$7.81 billion represents an increase of 0.5% from the second quarter of 2020 (C$7.77 billion). (See Bank of Nova Scotia stock analysis on TipRanks)

Bank of Nova Scotia topped earnings estimates in the past two quarters and according to Zacks, has a good chance of beating estimates again in the second quarter. The other big Canadian banks, which have already reported their quarterly results, all beat earnings estimates.

Canadian banks have reported higher profits on the back of lower provisions for credit losses. Profits plummeted last spring as banks had to set aside billions of dollars to protect themselves against anticipated bad debt amid an economic crash caused by the pandemic.

But lenders are now spending less on credit loss provisions as economic woes ease and people get vaccinated across North America.

On May 20, CIBC analyst Paul Holden maintained a Buy rating on BNS while raising its price target to C$91.00 from C$86.00 (12% upside potential).

After Bank of Nova Scotia announced it would invest C$500 million into its Chilean operations, Holden said he expected the deal to add three to four cents to EPS.

The rest of the Street is cautiously optimistic on BNS with a Moderate Buy consensus rating based on 4 Buys, 1 Hold, and 1 Sell. The average analyst price target of C$84.72 implies 4.3% upside potential to current levels.

TipRanks’ Smart Score

BNS scores a 7 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock returns should be in line with the overall market.

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