RY / RY CN
Royal Bank of Canada
Finance/Real Estate
03/23/2015
Presented
| Date | 03/18/2015 |
| Price | $59.28 |
| Market Cap | $85.50B |
| Ent Value | $85.48B |
| P/E Ratio | 12.4x |
| Book Value | $27.85 |
| Div Yield | 4.07% |
| Shares O/S | 1,441.98M |
| Ave Daily Vol | 1,520,000 |
| Short Int | N/A |
Current
| Price | $124.41 |
| Market Cap | $175.69B |
| Royal Bank of Canada, together with its subsidiaries, operates as a diversified financial service company worldwide. The company operates through five segments: Personal & Commercial Banking, Wealth Management, Insurance, Investor & Treasury Services, and Capital Markets. The Personal & Commercial Banking segment engages in the personal and business banking operations, auto financing, and retail investment businesses, as well as cards and payment solutions business. This segment provides a suite of financial products and services to individual, business clients, and public institutions through its branch, automated teller machines, online, and telephone banking networks, as well as through sales professionals. The Wealth Management segment offers a suite of investment, trust, banking, credit, and other wealth management solutions to high net worth and ultra high net worth clients; and asset management products and services directly to institutional and individual clients, as well as through distribution channels and third-party distributors. The Insurance segment provides life, health, property and casualty, and reinsurance products and solutions through insurance branches, field sales representatives, call centers, and online network, as well as through independent insurance advisors and affinity relationships. The Investor & Treasury Services segment offers global custody, fund, and pension administration, as well as a suite of products to institutional investors. This segment also provides cash management, correspondent banking, and trade finance services to financial institutions; and funding and liquidity management services. The Capital Markets segment offers corporate and investment banking, equity and debt origination and distribution, and structuring and trading for public and private companies, institutional investors, governments, and central banks. Royal Bank of Canada was founded in 1864 and is headquartered in Toronto, Canada. |
Publicly traded companies mentioned herein: Citigroup Inc (C), City National Corp (CYN), Royal Bank of Canada (RY / RY CN), Standard Chartered PLC (2888 HK)
Highlights
The presenter is short shares of Royal Bank of Canada (RY) at present levels ($59), “and it is NOT because of Canadian housing”. The stress in the energy credit market is the primary driver of his bearishness on Canada at this time, and based on his observations of the credit market this past fall as well as current data, RY is one of the banks most levered to energy in the world. His model assumes reasonable haircuts to earnings, and there appears to be near-term downside to the $45 level. The overall risk/ reward setup appears to be favorable as “downside to $40 - or even $35 - is not out of the question;” and on the upside, risk for bears should be contained as current multiples and Street estimates suggest shares are unlikely to trade above the low $60s.
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