Scotiabank (TSX:BNS) Stock Looks Below Fair Value On A 136% Run

Bank of Nova Scotia stock has delivered a strong run over the past few years, while valuation checks now present a mixed picture that blends an intrinsic value signal of upside with market multiples that look closer to fair. For investors, the question is whether the recent gains have already captured most of that potential or if the shares still leave room based on current fundamentals.

• Over the past 3 years, Bank of Nova Scotia has returned 136.1%, which puts recent enthusiasm for the stock front and center in any valuation discussion.
• Record recent earnings and continued dividend payments can support the investment case, while any setback in capital markets activity or credit quality may quickly change how the market prices the bank's earnings power.
• The broader valuation checks give a mixed read, with the stock scoring 4 out of 6, so it does not screen as a clear bargain or as clearly expensive on the combined metrics.

The issue now is whether Bank of Nova Scotia's current share price already reflects the intrinsic value suggested by the Excess Returns model or if there is still a margin between the trading price and that estimate.

Compare Bank of Nova Scotia's move with a curated list of other potential breakout opportunities across the market using the 14 high quality undervalued stocks.

Does Bank of Nova Scotia Look Undervalued on Excess Returns?

The Excess Returns model estimates what Bank of Nova Scotia can earn above its cost of equity over time, based on analyst forecasts for profitability and book value. For this stock, the model leans heavily on the relationship between return on equity and the value of the bank’s equity base.

Bank of Nova Scotia is assessed with a Book Value of CA$71.05 per share and Stable EPS of CA$9.70 per share, built from weighted future Return on Equity estimates from 9 analysts and an average Return on Equity of 13.97%. Against a Cost of Equity of CA$4.99 per share, the model calculates an Excess Return of CA$4.70 per share and a Stable Book Value of CA$69.41 per share, based on estimates from 10 analysts. These inputs roll up to an intrinsic value of CA$183.73 per share, which indicates the stock is trading at a 29.9% discount within this framework.

Because record Q3 2026 earnings set a high bar for Bank of Nova Scotia, the continuing discount in the Excess Returns output indicates that the market may be cautious about sustaining this performance.

On this model, Bank of Nova Scotia stock appears undervalued relative to its estimated intrinsic value.

Our Excess Returns analysis suggests Bank of Nova Scotia is undervalued by 29.9%. Track this in your watchlist or portfolio, or discover 14 more high quality undervalued stocks.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Bank of Nova Scotia.

Where Does Bank of Nova Scotia Sit on Earnings?

The P/E ratio is a useful lens for Bank of Nova Scotia because earnings are a key driver for large established banks. Right now the stock trades on a P/E of 17.4x, which is slightly below the peer average of 18.0x and above the broader banks industry average of 11.4x. That places Bank of Nova Scotia closer to the pricing of its direct peers than to the wider sector.

The fair P/E ratio, which reflects what investors might expect to pay given Bank of Nova Scotia's size, profitability profile and risk, sits at 18.3x. The gap between the current 17.4x and this fair level is small, so the stock neither screens as clearly cheap nor as materially expensive on earnings.

Overall, Bank of Nova Scotia appears roughly fairly valued on its P/E multiple.

See what the numbers say about this price — find out in our valuation breakdown.

The Bank of Nova Scotia Narrative: What Would Justify Today's Price?

Simply Wall St Narratives pick up where the valuation checks for Bank of Nova Scotia leave off and spell out which paths for growth, margins and earnings would need to hold for the stock to be worth meaningfully more or less than today’s price on the Community page. Each narrative ties its number to a clear view on how growth, profitability and risks could evolve, which you can revisit as new information emerges.

You can add your voice to the Simply Wall St community by sharing a Narrative on Bank of Nova Scotia that sets out a number driven case and a clear view on whether its record recent earnings and capital markets strength really support today's price. Put your assumptions on the table now, and track how your thesis holds up as new results and updates come through.

Do you think there's more to the story for Bank of Nova Scotia? Head over to our Community to see what others are saying!

The Bottom Line

For Bank of Nova Scotia, the Excess Returns intrinsic value estimate points to undervaluation, while the P/E view suggests the stock now trades close to what the market is willing to pay for similar banks. That gap reflects different lenses, with the intrinsic model anchored in the bank's capacity to earn above its cost of equity and the multiple view anchored in how peers are currently priced. With broader checks giving a mixed read, the key question for investors is whether recent earnings strength and capital markets activity prove durable enough to close that discount rather than signal a value trap.

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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