RY Stock Report

2-Year Price History

Ockham's Rating

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RY Revenue

As we have often noted, in our valuation methodology, "Cash is King." Well, it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company's stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 10 years. For, RY the high and low end of the Price to Sales per share ratios are 1.83x and 1.26x respectively.

Notice that RY's current Price to Sales per share ratio is 1.71x, which is above its historical average only slightly. So, while not a major concern it is worth noting that from a value perspective RY does not look undervalued on a Price to Sales basis. However, were the Price to Sales ratio to drop by 10% (the historical average) then we would become more positive on this stock.

RY Cash Earnings

Cash Earnings is always one of the most important factors to review for a company and, more importantly, an investment in a stock. RY is above its historical average multiple of cash earnings as calculated by Ockham. Similar to our analysis of sales per share, Ockham looks at the last 10 years of cash earnings levels for RY to identify where the current high and low price levels have been historically in relation to profit per share. Again, we utilize a weighted average methodology which relies more heavily on recent years of data. This weighted average framework provides us with an average high Price to Cash Earnings ratio per share of 15.52 and a 10.62 low over the same period.

Given this range of ratios per share, RY at its current price of $40.89 and a Price to Cash Earnings ratio of 14.98 is 14% above its average historical Price to Cash Earnings ratio. Obviously this makes us more hesitant about RY because cash earnings would need to rise to improve the valuation. Likewise, a decline in Price to Cash Earnings to below the average of 13.07 would significantly improve our outlook for RY given the current profit levels.

RY Dividends

While it is not necessary to pay an attractive dividend or a dividend at all, to receive a positive rating from Ockham, we view dividends as an additionally helpful measure in determining the future potential of any company.

In RY’s case, the estimated annual dividend is $1.62 resulting in a current dividend yield of 3.96%. Similar to our review of Sales and Cash Earnings per share, we evaluate dividend yields from RY against the historic high and low levels over the past 10 years. The highest dividend yield from RY over this period was 7.90% while the lowest dividend yield was 2.11% With that range in mind, RY’s current dividend yield is a full 20.88% below its median dividend yield historically. This is a negative from our perspective.