Royal Bank of Canada reports 11.4% Net Income growth
02.12.2015 • About Royal Bank of Canada (
$RY) • By InTwits
Royal Bank of Canada reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Royal Bank of Canada has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.2%. At the same time it's in pair with industry average of 4.7%.
- The company has potentially unprofitable business model: ROIC is at 6.7%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Royal Bank of Canada ($RY) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 37,094 | 38,126 | 38,581 | 42,011 | 43,279 | 3.0% |
| Net Income | 6,343 | 7,442 | 8,244 | 8,910 | 9,925 | 11.4% |
Balance Sheet
|
|---|
| Cash | 12,428 | 12,617 | 15,550 | 17,421 | 12,452 | -28.5% |
| Short Term Debt | 44,284 | 40,756 | 47,128 | 50,345 | 47,658 | -5.3% |
| Long Term Debt | 9,643 | 8,515 | 7,443 | 7,859 | 7,362 | -6.3% |
Cash flow
|
|---|
| Capex | 1,452 | 1,351 | 932 | 1,227 | 1,337 | 9.0% |
Ratios
|
|---|
| Revenue growth | 10.8% | 2.8% | 1.2% | 8.9% | 3.0% | |
| Net Income Margin | 17.1% | 19.5% | 21.4% | 21.2% | 22.9% | 1.7% |
| CAPEX, % of revenue | 3.9% | 3.5% | 2.4% | 2.9% | 3.1% | 0.2% |
| ROIC | 6.5% | 6.5% | 6.5% | 6.9% | 6.7% | -0.2% |
| ROE | 17.6% | 19.3% | 19.4% | 19.0% | 18.4% | -0.5% |
Revenue and profitability
The company's Revenue increased on 3.0% in FY2015.
Net Income marign increased slightly on 1.7 pp from 21.2% to 22.9% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 Royal Bank of Canada had CAPEX/Revenue of 3.1%. The company's CAPEX/Revenue showed almost no change from FY2012 to FY2015. For the last three years the average CAPEX/Revenue was 2.8%.
Return on investment
The company operates at good ROE (18.42%) while ROIC is low (6.66%). ROIC showed almost no change in FY2015. ROE decreased slightly on 0.55 pp from 19.0% to 18.4% in FY2015.
Leverage (Debt)
Debt decreased on 5.5% in FY2015 while cash dropped on 28.5% in FY2015.
Management team
The company's CEO David I Mckay "Dave" has spent 4 years at the company.
Appendix 1: Peers in Financial
Below you can find Royal Bank of Canada benchmarking vs. other companies in Financial industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Westaim Corp/The ($WED) | 35.7% | -99.9% | 38.0% | 5,680.8% | |
| Wall Financial Corp ($WFC) | | 35.2% | -74.1% | 285.4% | -75.3% |
| Element Financial Corp ($EFN) | | | 206.6% | 189.1% | |
| DealNet Capital Corp ($DLS) | -73.3% | 4,437.5% | 540.4% | 112.7% | |
| Gluskin Sheff + Associates Inc ($GS) | | -39.1% | 60.6% | 97.9% | -33.5% |
| |
|---|
| Median (72 companies) | 11.2% | 9.3% | 7.2% | 8.4% | -6.5% |
|---|
| Royal Bank of Canada ($RY) | | 2.8% | 1.2% | 8.9% | 3.0% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Olympia Financial Group Inc ($OLY) | 85.3% | 80.9% | 82.6% | 83.2% | |
| Morguard Corp ($MRC) | 74.8% | 74.0% | 69.9% | 68.6% | |
| DealNet Capital Corp ($DLS) | | 14.9% | 36.7% | 45.6% | |
| Brookfield Asset Management Inc ($BAM.A) | 34.3% | 25.6% | 30.7% | 28.6% | |
| Onex Corp ($OCX) | 20.0% | 20.1% | 26.2% | 27.9% | |
| |
|---|
| Median (11 companies) | 25.2% | 22.6% | 25.7% | 20.5% | 16.9% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Firm Capital Mortgage Investment Corp ($FC) | 88.7% | 87.6% | 87.9% | 88.8% | |
| Equitable Group Inc ($EQB) | 89.7% | 88.1% | 87.4% | 86.0% | |
| Alaris Royalty Corp ($AD) | 97.0% | 81.3% | 61.8% | 81.8% | |
| Brookfield Real Estate Services Inc ($BRE) | 77.1% | 77.7% | 77.9% | 78.4% | |
| First National Financial Corp ($FN) | 66.1% | 67.8% | 76.5% | 77.1% | |
| |
|---|
| Median (49 companies) | 35.6% | 32.3% | 32.1% | 31.5% | 47.9% |
|---|
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Killam Properties Inc ($KMP) | 73.6% | 80.7% | 114.1% | 143.5% | |
| Dundee Corp ($DC.A) | | 10.3% | 14.1% | 88.8% | 123.6% |
| StorageVault Canada Inc ($SVI) | 29.6% | 150.5% | 73.3% | 79.1% | |
| Mainstreet Equity Corp ($MEQ) | 152.4% | 115.8% | 62.3% | 75.8% | |
| First Capital Realty Inc ($FCR) | 102.8% | 127.9% | 76.1% | 73.8% | |
| |
|---|
| Median (74 companies) | 1.3% | 1.4% | 0.8% | 1.0% | 1.7% |
|---|
| Royal Bank of Canada ($RY) | 3.9% | 3.5% | 2.4% | 2.9% | 3.1% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Gluskin Sheff + Associates Inc ($GS) | 71.3% | 21.0% | 82.9% | 153.9% | 63.6% |
| Brookfield Real Estate Services Inc ($BRE) | 17.1% | 26.0% | 31.0% | 47.0% | |
| Redishred Capital Corp ($KUT) | -3.9% | -24.5% | 6.5% | 15.8% | |
| IGM Financial Inc ($IGM) | 15.3% | 14.2% | 14.2% | 13.7% | |
| Street Capital Group Inc ($SCB) | 2.3% | 10.9% | 11.0% | 13.4% | |
| |
|---|
| Median (76 companies) | 4.9% | 4.8% | 4.5% | 4.8% | 5.0% |
|---|
| Royal Bank of Canada ($RY) | 6.5% | 6.5% | 6.5% | 6.9% | 6.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| First National Financial Corp ($FN) | 37.6x | 34.3x | 33.7x | 40.9x | |
| Element Financial Corp ($EFN) | | 140.2x | 31.9x | 37.6x | |
| Gazit-Globe Ltd ($GZT) | 14.8x | 12.8x | 12.7x | 15.3x | |
| Morguard Corp ($MRC) | 7.5x | 8.9x | | 14.2x | |
| StorageVault Canada Inc ($SVI) | 6.0x | 11.2x | 9.7x | 13.6x | |
| |
|---|
| Median (41 companies) | 5.3x | 5.3x | 4.8x | 4.3x | 6.6x |
|---|
