Royal Bank of Canada reports 7.0% revenue growth in FY2016
30.11.2016 • About Royal Bank of Canada (
$RY) • By InTwits
Royal Bank of Canada reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Royal Bank of Canada has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.9%. At the same time it's in pair with industry average of 3.1%.
- CAPEX is quite volatile: 5,768,000 in FY2016, 8,548,933 in FY2015, 8,923,568 in FY2014, 14,227,777 in FY2013, 15,467,862 in FY2012
- The company has potentially unprofitable business model: ROIC is at 6.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Royal Bank of Canada ($RY) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 38,126 | 38,581 | 42,011 | 43,279 | 46,326 | 7.0% |
| Net Income | 7,442 | 8,244 | 8,910 | 9,925 | 10,405 | 4.8% |
Balance Sheet
|
|---|
| Cash | 12,617 | 15,550 | 17,421 | 12,452 | 14,929 | 19.9% |
| Short Term Debt | 40,756 | 47,128 | 50,345 | 47,658 | 50,369 | 5.7% |
| Long Term Debt | 8,515 | 7,443 | 7,859 | 7,362 | 9,762 | 32.6% |
Cash flow
|
|---|
| Capex | 1,351 | 932 | 1,227 | 1,337 | 1,257 | -6.0% |
Ratios
|
|---|
| Revenue growth | 2.8% | 1.2% | 8.9% | 3.0% | 7.0% | |
| Net Income Margin | 19.5% | 21.4% | 21.2% | 22.9% | 22.5% | -0.5% |
| CAPEX, % of revenue | 3.5% | 2.4% | 2.9% | 3.1% | 2.7% | -0.4% |
| ROIC | 6.5% | 6.5% | 6.9% | 6.7% | 6.1% | -0.6% |
| ROE | 19.3% | 19.4% | 19.0% | 18.4% | 16.7% | -1.8% |
Royal Bank of Canada ($RY) key quoterly financial indicators
| mln. CAD | FY16Q1 | FY16Q2 | FY16Q3 | FY16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 11,219 | 11,502 | 12,316 | 11,289 | -4.2% | 6.2% | 14.0% | 13.6% |
| Net Income | 2,426 | 2,560 | 2,886 | 2,533 | -0.3% | 3.5% | 17.8% | -1.4% |
Balance Sheet
|
|---|
| Cash | 17,050 | 14,845 | 19,501 | 14,929 | -14.9% | -19.3% | -2.4% | 19.9% |
| Short Term Debt | 51,931 | 47,121 | 46,679 | 50,369 | -12.7% | -13.2% | -16.1% | 5.7% |
| Long Term Debt | 9,854 | 9,564 | 9,765 | 9,762 | 24.9% | 22.7% | 32.4% | 32.6% |
Ratios
|
|---|
| Net Income Margin | 21.6% | 22.3% | 23.4% | 22.4% | 0.8% | -0.6% | 0.8% | -3.4% |
Revenue and profitability
The company's Revenue increased on 7.0%. Revenue growth showed acceleration in FY16Q4 - it increased 13.6% YoY.
Net Income marign showed almost no change in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 2.7% in FY2016. The company showed almost no change in CAPEX/Revenue from FY2013 to FY2016. For the last three years the average CAPEX/Revenue was 2.9%.
Return on investment
The company operates at good ROE (16.66%) while ROIC is low (6.09%). ROIC decreased slightly on 0.57 pp from 6.7% to 6.1% in FY2016. ROE decreased slightly on 1.8 pp from 18.4% to 16.7% in FY2016.
Leverage (Debt)
Debt increased on 9.3% while cash surged on 19.9%.
Management team
Royal Bank of Canada's CEO David I Mckay "Dave" has spent 4 years at the company.
Appendix 1: Peers in Financial
Below we provide Royal Bank of Canada benchmarking against other companies in Financial industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Grenville Strategic Royalty Corp ($GRC) | | | | 317.2% | |
| StorageVault Canada Inc ($SVI) | | 22.2% | 7.5% | 111.8% | |
| Slate Retail REIT ($SRT.UN) | | 316.8% | 229.7% | 92.5% | 21.6% |
| Mogo Finance Technology Inc ($GO) | | 13.7% | 34.6% | 86.0% | 14.6% |
| Morguard Corp ($MRC) | | 27.2% | 9.2% | 58.8% | 4.6% |
| |
|---|
| Median (54 companies) | | 7.1% | 9.0% | 3.3% | 5.2% |
|---|
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Olympia Financial Group Inc ($OLY) | 80.9% | 82.6% | 83.2% | 84.5% | 83.5% |
| Morguard Corp ($MRC) | 74.0% | 69.9% | 68.6% | 76.5% | 75.5% |
| Mogo Finance Technology Inc ($GO) | 70.4% | 64.5% | 63.4% | 62.3% | |
| StorageVault Canada Inc ($SVI) | 18.2% | 22.6% | 18.3% | 52.4% | |
| Clarke Inc ($CKI) | 28.1% | 20.0% | 18.9% | 43.4% | 41.6% |
| |
|---|
| Median (9 companies) | 28.1% | 30.7% | 28.3% | 43.4% | 30.3% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Firm Capital Mortgage Investment Corp ($FC) | 87.6% | 87.9% | 88.8% | 86.6% | |
| Equitable Group Inc ($EQB) | 88.1% | 87.4% | 86.0% | 84.7% | 83.0% |
| Atrium Mortgage Investment Corp ($AI) | 79.8% | | | 81.9% | 83.2% |
| Trez Capital Mortgage Investment Corp ($TZZ) | | | | 76.2% | |
| First National Financial Corp ($FN) | 67.8% | 76.5% | 77.1% | 74.6% | |
| |
|---|
| Median (37 companies) | 43.7% | 33.5% | 39.8% | 32.5% | 43.1% |
|---|
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Dundee Corp ($DC.A) | 10.3% | 14.1% | 88.8% | 123.6% | |
| Gazit-Globe Ltd ($GZT) | 80.2% | 43.3% | 52.1% | 69.3% | 95.5% |
| First Capital Realty Inc ($FCR) | 127.9% | 76.1% | 73.8% | 56.7% | 79.7% |
| Killam Properties Inc ($KMP) | 80.7% | 114.1% | 143.5% | 46.7% | 59.9% |
| StorageVault Canada Inc ($SVI) | 150.5% | 73.3% | 79.1% | 21.4% | |
| |
|---|
| Median (56 companies) | 0.6% | 0.6% | 0.7% | 0.7% | 0.7% |
|---|
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| CI Financial Corp ($CIX) | | | | | 24.1% |
| FirstService Corp ($FSV) | | | | | 17.4% |
| IGM Financial Inc ($IGM) | 14.2% | 14.2% | 13.7% | 13.7% | 13.1% |
| Alaris Royalty Corp ($AD) | 9.5% | 10.1% | 10.7% | 7.3% | 12.3% |
| Genworth MI Canada Inc ($MIC) | 11.9% | 9.6% | 9.7% | 9.5% | 9.4% |
| |
|---|
| Median (56 companies) | 4.6% | 3.8% | 3.9% | 3.0% | 3.1% |
|---|
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Element Financial Corp ($EFN) | 140.2x | 31.9x | 37.6x | 79.9x | 22.6x |
| First National Financial Corp ($FN) | 34.3x | 33.7x | 40.9x | 37.4x | |
| StorageVault Canada Inc ($SVI) | 11.2x | 9.7x | 13.6x | 35.7x | |
| Gazit-Globe Ltd ($GZT) | 12.8x | 12.7x | 15.3x | 22.1x | 15.2x |
| Equitable Group Inc ($EQB) | 11.8x | 10.2x | 9.8x | 12.3x | 13.7x |
| |
|---|
| Median (28 companies) | 5.3x | 4.6x | 4.7x | 6.0x | 7.8x |
|---|
