RBC has performed better than peers, has better ROE and ROA, deserves premium valuation
Royal Bank Of Canada (NYSE: RY) we see as a potential investment opportunity in the financial services sector. With their acquisitions of HSBC Canada, we see further earnings increase by about 7%. The bank has had success with its strategy to diversify operations outside of Canada, and we see that is a primary growth driver. RY has a revenue growth rate of 124% when compared to the industry average of just 75%. Return On Equity RY comes in at 14% compared to the industry average of 11.5%. Given that revenue growth rate and higher return on equity, we think RY deserves a premium valuation compared to its peers. We see upside to $105 a share in the near term, with more longer term upside to about $120 a share is possible.