Scotiabank: Further Upside Is Capped By Valuation

Ezequiel Szyrko194 FollowersFollow5ShareSavePlay(16min)CommentsSummaryI’m rating Scotiabank as a Hold, mostly because of its current valuation and profitability.Once Price/Book ratios reach these current levels, we often see stock prices stall or start to drop.The company is performing well overall, given its current constraints. While the Canadian banking segment is weighing on results, they're cutting costs and divesting from underperforming segments (Colombia/Central America).I expect results to pick up slightly, but valuation caps the upside. So, while we might see some improvement, it’s not enough to justify a bullish rating in my view. JHVEPhoto/iStock Editorial via Getty Images Thesis I rate Scotiabank (BNS) as a Hold, mainly due to valuation. The Price/book has actually turned out to be a very sound metric to value this company, since it oscillated between 0.9-1.9x historically. My base caseThis article was written byEzequiel Szyrko194 FollowersFollowMy investing approaches are GARP, Value, and Growth. I closely follow insider buying and buybacks. Also, I pay attention to some technical analysis tools, such as Elliott Wave, EMA crossovers, and chart patterns.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.