Q: RY has had a nice run over the last month. When you look at its fundamentals, will it continue to run a bit more? Would you buy now, at its current price?
5i Research Answer:
RYs acquisition of HSBC's Canadian operations has helped to add clients and enhance its retail and commercial banking segments. It continues to be a strong Canadian bank, and the other large Canadian banks also saw price increases over the past month. It pays a yield of 3.3%, and is expected to grow its earnings by 10% and 7% over the next two years, respectively. It trades at a decent valuation of 13X forward earnings, at the higher end of its historical average, but its net profit margin has also been expanding. For a long-term hold, we would be comfortable buying here.