If you have ever wondered whether Bank of Nova Scotia is still a value play after its big run, you are in the right place. We are going to break down what the current share price really implies.

The stock has quietly climbed to around CA$98.30, delivering roughly 1.5% over the last week, 6.1% over the last month, 27.2% year to date, and 91.0% over five years. This naturally raises the question of how much upside might be left.

Recent headlines have focused on Bank of Nova Scotia leaning further into international banking markets and reshaping parts of its portfolio, moves that investors often read as long term growth signals. At the same time, shifting expectations around interest rate cuts and the broader economic outlook have sharpened the market's view on bank risk, which helps explain the stronger share price momentum.

On our scorecard, Bank of Nova Scotia passes only 2 out of 6 undervaluation checks, giving it a valuation score of 2/6. It is therefore far from a slam dunk bargain on traditional metrics, but the real story comes out when we compare different valuation approaches and finish with a more nuanced way to judge what the market might be missing.

Bank of Nova Scotia scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

The Excess Returns model looks at how effectively a bank converts its equity base into profits above the return that shareholders demand, then capitalizes those extra profits into an intrinsic value per share.

For Bank of Nova Scotia, the starting point is its Book Value of CA$70.26 per share and an Average Return on Equity of 13.17%. Analysts expect this to translate into Stable EPS of CA$8.88 per share, based on forward looking estimates from 9 analysts. Against a Cost of Equity of CA$4.89 per share, the bank is estimated to generate an Excess Return of CA$3.99 per share, which is what ultimately drives value in this framework.

Using these inputs, the Excess Returns model arrives at an intrinsic value of about CA$155.86 per share, implying the stock is roughly 36.9% undervalued versus the current price near CA$98.30. In other words, the market appears to be discounting Bank of Nova Scotia's ability to keep earning attractive returns on a Stable Book Value of CA$67.41 per share.

Result: UNDERVALUED

Our Excess Returns analysis suggests Bank of Nova Scotia is undervalued by 36.9%. Track this in your watchlist or portfolio, or discover 909 more undervalued stocks based on cash flows.

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.

For a profitable, mature bank like Bank of Nova Scotia, the price to earnings ratio is a useful way to judge value because it directly links what investors pay today to the profits the bank is generating now and is expected to sustain.

In broad terms, a higher PE ratio can be justified when investors expect stronger earnings growth or see the business as lower risk. Slower growth or higher uncertainty typically warrant a lower, more conservative multiple. Bank of Nova Scotia currently trades on about 16.73x earnings, which is above both the wider Banks industry average of roughly 10.56x and the peer group average of about 14.46x, suggesting the market is already assigning it a premium.

Simply Wall St’s Fair Ratio, at around 15.44x, estimates what a more tailored PE should be after factoring in the bank’s specific earnings growth outlook, profitability, risk profile, industry positioning and market cap. This makes it a more nuanced yardstick than a simple comparison with peers or the industry alone. Since the current PE of 16.73x sits meaningfully above this Fair Ratio, the shares look modestly overvalued on this metric.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1442 companies where insiders are betting big on explosive growth.

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, an easy tool on Simply Wall St’s Community page that lets you attach a clear story about Bank of Nova Scotia’s future to a concrete forecast of revenue, earnings and margins. You can then translate that into your own Fair Value, compare it with today’s price to decide whether to buy or sell, and have that view automatically update as fresh news or earnings arrive. For example, one investor might build a bullish Narrative around faster international growth and improved efficiency that supports a Fair Value above the current analyst high of roughly CA$94. Another might focus on Latin American risk, housing exposure and regulation to reach a more cautious Fair Value closer to the low end near CA$78.

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!

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.

Companies discussed in this article include BNS.TO.

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