Friday, January 26, 2007

RBC is a Zacks Number 1 Rank Stock

  
Zacks, 26 January 2007

Royal Bank of Canada, a Zacks #1 Rank stock, reported record profits for the full year of 2006. The Board of Directors recently declared a quarterly dividend of 40 cents per common share of stock, leading to a current dividend yield of 2.96%. Consensus estimates for this year are up over the past two months. The company has a price-to-book ratio of 2.7.

Royal Bank of Canada is Canada's largest bank as measured by assets and market capitalization and one of North America's leading diversified financial services companies. RY provides personal and commercial banking, wealth management services, insurance, corporate and investment banking and transaction processing services on a global basis.

On Nov 30, RY reported fourth-quarter earnings per share of 85 cents, which beat analysts’ expectations by 11.8%. Compared to profits of 35 cents per share in the prior-year period, earnings soared 142.9%. Total revenue from continuing operations amounted to 5.35 billion Canadian dollars ($4.77 billion), compared to 4.8 billion Canadian dollars in the fourth quarter of 2005.

For the entire year, profits came in at a record 4.73 billion Canadian dollars ($4.22 billion), which represented the highest annual earnings ever reported by a Canadian bank. Revenues climbed to 20.6 billion Canadian dollars ($18.4 billion) from 19.2 billion Canadian dollars last year.

President and CEO Gordon Nixon stated, “Throughout 2006, we continued to build on the momentum we established in 2005. Our record results reflect our growth initiatives across all of our businesses, as well as geographies.”

The consensus estimate for this year currently sits at $3.46. Compared to estimates of 60 days earlier, it has jumped 11 cents. Earnings per share are projected to grow 9% over the next 3-5 years. Looking ahead, RY expects “a robust Canadian economy with continued strong consumer spending and solid business investment.”

The Board of Directors recently declared a quarterly dividend of 40 cents per common share of stock. The dividend is payable on Feb 23 to common shareholders of record as of Jan 25. RY has a current dividend yield of 2.96% and a five-year average dividend yield of 3.23%.

On Jan 11, RY announced that it acquired Daniels & Associates, L.P. According to Thomson Financial, Daniels & Associates completed more M&A transactions within the cable, telecommunications, broadcast and Internet services sectors in the United States from 2000 through 2006 than any other investment bank—nearly double its closest competitor.

RY is currently trading at a valuation of 13.4x current fiscal-year estimated earnings and at 12.1x next fiscal-year estimated earnings. The market, as represented by the S&P 500, is trading at a valuation of 15.9x current fiscal-year estimated earnings and at 14.5x next fiscal-year estimated earnings. The company has a price-to-book ratio of 2.7, compared to 4.9 for the market.
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