Stock of the Day

April 20, 2022

Royal Bank of Canada (RY)

$127.59
+$0.63 (+0.5%)
Market Cap: $180.70B

About Royal Bank of Canada

Royal Bank of Canada operates as a diversified financial service company worldwide. The company's Personal & Commercial Banking segment offers checking and savings accounts, home equity financing, personal lending, private banking, indirect lending, including auto financing, mutual funds and self-directed brokerage accounts, guaranteed investment certificates, credit cards, and payment products and solutions; and lending, leasing, deposit, investment, foreign exchange, cash management, auto dealer financing, trade products, and services to small and medium-sized commercial businesses. This segment offers financial products and services through branches, automated teller machines, and mobile sales network. Its Wealth Management segment provides a suite of wealth, investment, trust, banking, credit, and other advice-based solutions and strategies to high net worth and ultra-high net worth individuals, and institutional clients; asset management products to institutional and individual clients; and asset and investor services to financial institutions, asset managers, and asset owners. The company's Insurance segment offers life, health, home, auto, travel, wealth, annuities, property and casualty, and reinsurance advice and solutions; and business insurance services to individual, business, and group clients through its advice centers, RBC insurance stores, and mobile advisors; digital platforms; and independent brokers and partners. The company's Capital Markets segment offers advisory and origination, sales and trading, lending and financing, and transaction banking services to corporations, institutional clients, asset managers, private equity firms, and governments. The company was founded in 1864 and is headquartered in Toronto, Canada.

Royal Bank of Canada Bull Case

Here are some ways that investors could benefit from investing in Royal Bank of Canada:

  • The current stock price is around $125, which may present a buying opportunity for investors looking for value in the financial sector.
  • Royal Bank of Canada has shown resilience with a strong revenue growth of 10.7% compared to the same quarter last year, indicating robust business performance.
  • Analysts have a consensus rating of "Moderate Buy" for Royal Bank of Canada, suggesting positive sentiment and potential for price appreciation.
  • The company has a solid return on equity of 15.26%, reflecting effective management and profitability, which can be attractive to investors seeking strong financial performance.
  • Institutional investors own over 45% of the company's stock, indicating confidence from large financial entities in Royal Bank of Canada's future prospects.

Royal Bank of Canada Bear Case

Investors should be bearish about investing in Royal Bank of Canada for these reasons:

  • The company recently reported earnings per share (EPS) of $2.20, which missed the consensus estimate, raising concerns about its short-term profitability.
  • Royal Bank of Canada has experienced fluctuations in its stock price, with a recent decline of about 2.8%, which may indicate volatility and risk for investors.
  • Despite revenue growth, the reported revenue of $11.38 billion fell short of expectations, suggesting potential challenges in meeting market forecasts.
  • The financial services sector can be sensitive to economic downturns, and any adverse economic conditions could impact Royal Bank of Canada's performance.
  • With a debt-to-equity ratio of 0.11, while low, it may indicate limited leverage for growth opportunities compared to competitors with higher ratios.
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