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Royal Bank of Canada RY

Morningstar Rating
$100.40 +1.25 (1.26%)
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Company Report

Royal Bank of Canada Earnings: Decent Results but Credit and Acquisition Costs are a Headwind

Wide-moat-rated Royal Bank of Canada reported decent first-quarter earnings that were largely in line with our expectations, as solid Canadian banking results were offset by higher expenses and credit costs. Adjusted net income, which accounts for both transaction expenses related to the acquisition of HSBC Canada and the CAD 1.05 billion Canadian recovery dividend payment made last year, decreased 5% from last year to CAD 4.1 billion. These results translate to an adjusted return on equity of 14.9%, which is somewhat below the firm's medium-term target of 16%. As we incorporate these results, we do not plan to materially alter our CAD 134/USD 101 per share fair value estimate for Royal Bank of Canada. We see the shares as fairly valued.

Price vs Fair Value

RY is trading at a 2% discount.
Price
$99.42
Fair Value
$484.00
Uncertainty
Low
1-Star Price
$764.77
5-Star Price
$82.70
Economic Moat
Vlwry
Capital Allocation
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Bulls Say, Bears Say

Bulls

Royal Bank of Canada's worldwide scope in capital markets and wealth management provides a powerful and diversified stream of revenue. This should lead to outsize fee income versus peers.

Bears

The bank has one of the larger exposures to the Canadian housing market, and as the Canadian consumer's ability to borrow becomes constrained, RBC may struggle to achieve loan and revenue growth, and incur additional credit risk.

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News

Trading Information

Previous Close Price
$99.15
Day Range
$99.11100.40
52-Week Range
$77.90102.07
Bid/Ask
$99.58 / $100.53
Market Cap
$141.95 Bil
Volume/Avg
155 / 1.1 Mil

Key Statistics

Price/Earnings (Normalized)
11.86
Price/Sales
3.47
Dividend Yield (Trailing)
3.97%
Dividend Yield (Forward)
4.06%
Total Yield
3.97%

Company Profile

Royal Bank of Canada is one of the two largest banks in Canada. It is a diversified financial services company, offering personal and commercial banking, wealth-management services, insurance, corporate banking, and capital markets services. The bank is concentrated in Canada, with additional operations in the U.S. and other countries.
Sector
Financial Services
Industry
Banks - Diversified
Stock Style Box
Large Core
Total Number of Employees
94,000

Competitors

Valuation

Metric
RY
TD
CM
Price/Earnings (Normalized)
11.8610.5510.23
Price/Book Value
1.751.421.28
Price/Sales
3.472.772.65
Price/Cash Flow
9.779.675.68
Price/Earnings
RY
TD
CM

Financial Strength

Metric
RY
TD
CM
Quick Ratio
Current Ratio
Interest Coverage
Quick Ratio
No chart available

Profitability

Metric
RY
TD
CM
Return on Assets (Normalized)
0.80%0.75%0.69%
Return on Equity (Normalized)
14.85%14.20%13.91%
Return on Invested Capital (Normalized)
Return on Assets
RY
TD
CM
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Banks - Diversified Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
JPM
JPMorgan Chase & CoTbvbsmswwHbmk$574.7 Bil
BAC
Bank of America CorpHktxcjjyWhbn$298.3 Bil
WFC
Wells Fargo & CoDhbtwtxGrnhc$204.0 Bil
HSBC
HSBC Holdings PLC ADRFgwdwvqjDyr$147.2 Bil
MUFG
Mitsubishi UFJ Financial Group Inc ADRZtpckbkgwNkvf$121.8 Bil
C
Citigroup IncXtwtxxxrQqlm$120.2 Bil
TD
The Toronto-Dominion BankFzbplpgylTrqnp$107.1 Bil
UBS
UBS Group AGHmzncsjsYwpdcs$100.3 Bil
SAN
Banco Santander SA ADRQnvgGdfljq$76.7 Bil

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