Royal Bank Of Canada (RY) AI Stock Analysis

• Market Cap: C$323.08B
• Dividend Yield: 2.58%
• Average Volume (3M): 3.85M
• Price to Earnings (P/E): 15.6
• Beta (1Y): 0.66
• Revenue Growth: 2.13%
• EPS Growth: 25.16%
• Country: CA
• Employees: 94,624
• Sector: Financial
• Sector Strength: 70
• Industry: Banks - Diversified
• EPS (TTM): 4.08
• Shares Outstanding: 1,400,212,000
• 10 Day Avg. Volume: 3,387,792
• 30 Day Avg. Volume: 3,851,975
• PEG Ratio: 0.56
• Price to Book (P/B): 2.08
• Price to Sales (P/S): 2.11
• P/FCF Ratio: 5.47
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$252.88
• Price Target Upside: 9.59% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 12
• EPS Forecast (FY): 15.84
• Revenue Forecast (FY): C$70.99B

• Rating: 69 Neutral
• Price Target: C$253.00 ▲(9.65% Upside)
• Action: Downgraded Date: 03/03/26
• Date: Action: Downgraded 03/03/26

The score is driven primarily by solid financial performance (strong growth/profitability and ROE) but held back by high leverage and a meaningful TTM free-cash-flow decline. The earnings call adds support via strong results, higher ROE targets, and shareholder returns, while credit/CRE and insurance risks remain key constraints. Technically, the longer-term trend is positive but near-term indicators are soft; valuation is reasonable with a supportive dividend yield.

Positive Factors

Diversified business model

RBC's diversified mix across personal/commercial banking, wealth, insurance and capital markets produced record quarterly earnings. This multi-line exposure smooths revenue cyclicality, supports cross-selling and provides multiple durable fee and NII streams over the next 2–6 months.

Strong ROE and capital

A ~16.8% ROE demonstrates efficient capital deployment while a CET1 of 13.5% provides a regulatory buffer. Together these metrics underpin sustainable shareholder returns and the bank's capacity to absorb shocks and fund lending growth without immediate capital raises.

Wealth & Capital Markets strength

Record wealth revenues and a 45% jump in capital markets income boost recurring fee income and high-margin trading/advisory flows. These fee-led businesses improve earnings mix resilience and support earnings persistence through varying rate cycles and market conditions.

Negative Factors

High leverage

RBC's structurally high leverage (~6x) is typical for large diversified banks but amplifies downside in stress. Higher leverage reduces shock absorption, can increase funding sensitivity and constrains capital flexibility if credit losses or market shocks accelerate over a multi-month horizon.

Falling free cash flow

A near 50% drop in TTM free cash flow weakens the bank's cash conversion profile. While absolute FCF remains sizable, the decline signals reduced capacity for discretionary buybacks, incremental investments or cushion against shocks, raising medium-term payout and reinvestment risk.

Credit/insurance headwinds

Rising provisions and commercial real estate stress, plus a 40% insurance income drop from actuarial changes, indicate material earnings volatility. These credit and insurance pressures can persist across quarters, pressuring reserves, margins and capital allocation over the medium term.

Royal Bank Of Canada Business Overview & Revenue Model

Company Description

Royal Bank of Canada operates as a diversified financial service company worldwide. The company's Personal & Commercial Banking segment offers checking and savings accounts, home equity financing, personal lending, private banking, indirect lending, including auto financing, mutual funds and self-directed brokerage accounts, guaranteed investment certificates, credit cards, and payment products and solutions; and lending, leasing, deposit, investment, foreign exchange, cash management, auto dealer financing, trade products, and services to small and medium-sized commercial businesses. This segment offers financial products and services through branches, automated teller machines, and mobile sales network. Its Wealth Management segment provides a suite of advice-based solutions and strategies to high net worth and ultra-high net worth individuals, and institutional clients. The company's Insurance segment offers life, health, home, auto, travel, wealth, annuities, and reinsurance advice and solutions; and business insurance services to individual, business, and group clients through its advice centers, RBC insurance stores, and mobile advisors; digital, mobile, and social platforms; independent brokers; and travel partners. Its Investor & Treasury Services segment provides asset servicing, custody, payments, and treasury services to financial and other investors; and fund and investment administration, shareholder, private capital, performance measurement and compliance monitoring, distribution, transaction banking, cash and liquidity management, foreign exchange, and global securities finance services. The company's Capital Markets segment offers corporate and investment banking, as well as equity and debt origination, distribution, advisory services, sale, and trading services for corporations, institutional investors, asset managers, private equity firms, and governments. The company was founded in 1864 and is headquartered in Toronto, Canada.

How the Company Makes Money

Royal Bank of Canada's revenue model is primarily based on interest income, fee-based income, and trading revenues. The majority of its revenue comes from Personal & Commercial Banking, which earns interest from loans and mortgages, as well as fees from various banking transactions. Wealth Management contributes significantly through asset management fees and commissions from financial products. Insurance operations generate premiums and investment income, while Capital Markets focuses on trading, investment banking, and advisory services. Additionally, RBC's Investor & Treasury Services provides custody and administration services, which further contribute to its revenue. Strategic partnerships and a strong digital banking presence also enhance its earnings potential.

Royal Bank Of Canada Financial Statement Overview

Summary

Strong TTM revenue growth (+24.4%) and solid profitability (net margin ~20.9%) with healthy ROE (~15.6%), but the profile is tempered by structurally high leverage (debt-to-equity ~6.0x) and a sharp TTM free-cash-flow decline (~-46.5%), reducing consistency and increasing cycle sensitivity.

Income Statement

TTM (Trailing-Twelve-Months) shows strong top-line momentum (revenue up 24.4%) with healthy profitability (net margin ~20.9% and EBIT margin ~7.3%). Net income has also improved versus prior years, supporting earnings resilience. Offsetting this, margins have been volatile across annual periods (including unusually high gross margin readings in several years and lower net margin in 2025), which reduces confidence in consistency and comparability of the trend.

Balance Sheet

The balance sheet is solid in absolute scale with equity of ~$139.8B supporting a large asset base (~$2.34T), and returns on equity are consistently healthy (~12%–16% range; ~15.6% in TTM). The key constraint is high leverage typical of diversified banks: debt-to-equity is ~6.0x in TTM (similar level in 2025 and elevated in prior years), which can amplify downside risk if credit conditions deteriorate.

Cash Flow

Cash generation remains meaningful with TTM operating cash flow of ~$30.5B and free cash flow of ~$28.4B, and free cash flow is well-aligned with earnings (about 0.93x of net income in TTM). However, the trajectory is a concern: TTM free cash flow declined sharply (down ~46.5%), and operating cash flow relative to the company’s asset base remains low, pointing to weaker year-to-year conversion stability.

Breakdown	TTM	Oct 2025	Oct 2024	Oct 2023	Oct 2022	Oct 2021
Income Statement
Total Revenue	100.64B	137.36B	54.11B	49.00B	48.50B	50.45B
Gross Profit	63.37B	62.17B	54.11B	49.00B	48.50B	50.45B
EBITDA	7.69B	0.00	0.00	0.00	0.00	0.00
Net Income	21.02B	20.36B	16.23B	14.61B	15.79B	16.04B
Balance Sheet
Total Assets	2.34T	2.33T	2.17T	2.01T	1.92T	1.71T
Cash, Cash Equivalents and Short-Term Investments	46.23B	165.28B	167.13B	212.00B	240.60B	231.03B
Total Debt	362.42B	834.96B	779.52B	774.59B	699.12B	567.25B
Total Liabilities	2.20T	2.19T	2.04T	1.89T	1.81T	1.61T
Stockholders Equity	139.80B	139.09B	127.09B	117.66B	108.06B	98.67B
Cash Flow
Free Cash Flow	28.36B	52.98B	20.86B	23.35B	19.44B	58.86B
Operating Cash Flow	30.52B	55.22B	23.14B	26.08B	21.94B	61.04B
Investing Cash Flow	-72.85B	-68.57B	-20.89B	-28.27B	-57.05B	-57.35B
Financing Cash Flow	18.34B	-6.71B	-8.15B	-9.83B	-2.19B	-5.93B

Royal Bank Of Canada Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 230.74
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:RY, the sentiment is Neutral. The current price of 230.74 is below the 20-day moving average (MA) of 233.05, below the 50-day MA of 232.16, and above the 200-day MA of 201.57, indicating a neutral trend. The MACD of 0.35 indicates Positive momentum. The RSI at 47.47 is Neutral, neither overbought nor oversold. The STOCH value of 31.33 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:RY.

Royal Bank Of Canada Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BNS	77 Outperform	C$127.41B	15.30	10.39%	4.32%	-3.65%	-1.73%
RY	69 Neutral	C$323.08B	15.63	15.48%	2.58%	2.13%	25.16%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
TD	67 Neutral	$227.03B	10.77	17.76%	3.34%	3.07%	144.41%
CM	64 Neutral	$128.49B	14.28	14.85%	3.07%	-3.13%	18.22%
BMO	62 Neutral	C$140.46B	16.32	10.53%	3.61%	-1.30%	20.41%
NA	58 Neutral	C$74.10B	18.10	13.53%	2.64%	7.50%	-5.28%