Earlier today, Bank of Nova Scotia (TSE:BNS) (NYSE:BNS), also known as Scotiabank, reported its Q4-2022 financial results, which missed revenue expectations but beat earnings-per-share (EPS) expectations. However, the stock still finished 2.5% lower due to a worsening outlook ahead.
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BNS’ revenue reached C$7.63 billion compared to the consensus estimate of about C$8.05 billion. Also, its adjusted earnings per share were C$2.06, beating the C$2.00 consensus estimate but down from the C$2.10 per share recorded in the same period last year. Its provisions for credit losses increased from C$168 million to C$529 million as lenders set aside more money and exercised caution.
Looking forward, BNS expects its profitability to be negatively impacted next year due to a sour economic outlook. Further, Scotiabank’s adjusted return on equity fell to 15% from 15.6% last year. On a positive note, its International Banking segment grew its net income by 32% year-over-year, reaching C$2.45 billion. Also, BNS met its profitability targets for the full year, with full-year adjusted EPS of C$8.50 and an adjusted return on equity of 15.6%.
Is BNS Stock a Buy, According to Analysts?
According to analysts, BNS stock comes in as a Hold based on just one Buy and eight Hold ratings assigned in the past three months. Nonetheless, the average BNS stock price target of C$82.37 implies 18.2% upside potential.
Conclusion: A Tough Road Ahead
Bank of Nova Scotia faces a tough macroeconomic environment ahead, which is likely to negatively impact the company’s earnings. Due to the not-so-optimistic outlook, analysts mostly rate BNS as a Hold.
