A Look at Scotiabank's (TSX:BNS) Valuation Following Restructuring Moves and Capital Strategy Updates

The Bank of Nova Scotia (TSX:BNS) is making headlines after recent layoffs in Canada, coordinated as part of a broader plan to improve efficiency and focus on growth. Investors are also watching closely as the bank shared updated figures for its earnings contribution from KeyCorp and confirmed upcoming quarterly results.

Alongside these strategic moves, Bank of Nova Scotia has been active in fixed income markets by issuing multiple bonds in October. Together, these developments highlight an ongoing restructuring and capital management strategy that could influence how the stock is valued in the months ahead.

See our latest analysis for Bank of Nova Scotia.

Shares of Bank of Nova Scotia are showing growing strength, with a nearly 16.3% 90-day share price return and a one-year total shareholder return topping 30.8%. Momentum has built steadily as investors respond to the bank’s restructuring moves and recent capital management activity. This suggests an improving outlook both in the short term and over the long haul.

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With shares outperforming and ongoing transformation underway, the key question for investors is whether Bank of Nova Scotia’s solid momentum signals an undervalued opportunity or if the market has already priced in future growth prospects.

Most Popular Narrative: 3.2% Overvalued

Bank of Nova Scotia’s last close price of CA$89.87 sits above the most widely referenced narrative’s fair value estimate of CA$87.07, highlighting a slim premium. This sets the stage for a closer look at what could be fueling this higher-than-average valuation among analysts tracking the stock.

Expansion of banking and wealth management services in high-growth Pacific Alliance countries (Mexico, Peru, Chile, Colombia) positions BNS to capture revenue growth from increasing financial inclusion and rising middle-class demand for loans and investment products. This contributes to expectations for future top-line and earnings expansion.

Read the complete narrative.

Want to know which projections make analysts aim higher despite sluggish Canadian growth? The narrative is anchored by international expansion and big bets on digital reinvention. Find out which bold growth levers could surprise even seasoned investors. See what really drives this valuation outlook.

Result: Fair Value of $87.07 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent pressure from slow Canadian loan growth or instability in Latin American markets could quickly challenge this optimistic outlook for Bank of Nova Scotia.

Find out about the key risks to this Bank of Nova Scotia narrative.

Another View: Our DCF Model Suggests Undervaluation

While analysts see Bank of Nova Scotia as slightly overvalued based on consensus price targets, our SWS DCF model points in the opposite direction. According to this method, the bank’s shares are trading at a notable 16.8% below intrinsic value. This suggests meaningful upside potential if long-term cash flow prospects materialize.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Bank of Nova Scotia for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Bank of Nova Scotia Narrative

If you have a different perspective or want to dig deeper into the numbers, you can shape your own story in just a few minutes. Do it your way

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Bank of Nova Scotia.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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