Bank of Nova Scotia (NYSE:BNS) and Sumitomo Mitsui Financial Group (NYSE:SMFG) Head-To-Head Review

Bank of Nova Scotia (NYSE:BNS) and Sumitomo Mitsui Financial Group (NYSE:SMFG) are both large-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, dividends, valuation, institutional ownership, profitability, risk and analyst recommendations.

Insider and Institutional Ownership

49.1% of Bank of Nova Scotia shares are owned by institutional investors. Comparatively, 3.9% of Sumitomo Mitsui Financial Group shares are owned by institutional investors. 0.1% of Sumitomo Mitsui Financial Group shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Dividends

Bank of Nova Scotia pays an annual dividend of $2.95 per share and has a dividend yield of 5.4%. Sumitomo Mitsui Financial Group pays an annual dividend of $0.11 per share and has a dividend yield of 0.7%. Bank of Nova Scotia pays out 86.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sumitomo Mitsui Financial Group pays out 12.1% of its earnings in the form of a dividend. Bank of Nova Scotia has increased its dividend for 14 consecutive years. Bank of Nova Scotia is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent recommendations and price targets for Bank of Nova Scotia and Sumitomo Mitsui Financial Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bank of Nova Scotia	0	5	4	0	2.44
Sumitomo Mitsui Financial Group	0	0	0	0	0.00

Bank of Nova Scotia presently has a consensus target price of $81.00, suggesting a potential upside of 47.17%. Given Bank of Nova Scotia’s stronger consensus rating and higher probable upside, research analysts plainly believe Bank of Nova Scotia is more favorable than Sumitomo Mitsui Financial Group.

Valuation & Earnings

This table compares Bank of Nova Scotia and Sumitomo Mitsui Financial Group”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bank of Nova Scotia	$55.90 billion	1.23	$5.70 billion	$3.41	16.14
Sumitomo Mitsui Financial Group	$66.82 billion	1.48	$7.77 billion	$0.91	16.73

Sumitomo Mitsui Financial Group has higher revenue and earnings than Bank of Nova Scotia. Bank of Nova Scotia is trading at a lower price-to-earnings ratio than Sumitomo Mitsui Financial Group, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Bank of Nova Scotia has a beta of 1.13, meaning that its stock price is 13% more volatile than the S&P 500. Comparatively, Sumitomo Mitsui Financial Group has a beta of 0.4, meaning that its stock price is 60% less volatile than the S&P 500.

Profitability

This table compares Bank of Nova Scotia and Sumitomo Mitsui Financial Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bank of Nova Scotia	8.83%	11.27%	0.60%
Sumitomo Mitsui Financial Group	11.57%	7.96%	0.40%

Summary

Bank of Nova Scotia beats Sumitomo Mitsui Financial Group on 10 of the 17 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 Sumitomo Mitsui Financial Group

Sumitomo Mitsui Financial Group, Inc., together with its subsidiaries, provides banking, leasing, securities, credit card, and consumer finance services in Japan, the Americas, Europe, the Middle East, Asia, and Oceania. It operates through Wholesale Business Unit, Retail Business Unit, Global Business Unit, and Global Markets Business Unit segments. The company was incorporated in 2002 and is headquartered in Tokyo, Japan.