Security Analysis Assignment

Executive Summary

Royal Bank of Canada became the largest bank in Canada when the bank's main and only purpose was to accept money that is in terms of deposit from clients and lend out money to the clients by charging some cost on it. RBC became Canada's largest bank in terms of its balance sheet size in the year 1920. Now the banks have come up with a variety of financial services to offer clients and the balance sheet size and its assets are not only the most important part to be on number one among the banks of a country. Comparative analysis of bank size now integrates other financial measures that are market capitalization and net income of the company. Still after the advancement and changes RBC remains Canada's leading financial service business. The aim of this report is to provide an informed recommendation of whether to purchase the stocks of RBS or not. After analysis, through the estimation of intrinsic value methods, it has been determined that the stock is a BUY for investors.

Introduction4

Analysis4

Recommendation & Conclusion9

References10

Security Analysis Assignment

Introduction

Being a junior analyst, in the security analysis division of a brokerage firm, I have picked up Royal Bank of Canada for conducting a security analysis report. The aim of this report is to provide an informed recommendation of whether to purchase the stocks of RBS or not. After analysis, through the estimation of intrinsic value methods, it has been determined that the stock is a BUY for investors.

Security analysis is basically an evaluation and examination of various shares and factors of the company that affects its value of securities (www.investorwords.com). In the security analysis it is the responsibility to analyze various many financial instruments that are tradable. This security analysis basically helps the financial analysts or the investors to find out the true value of an asset or a security in a company's portfolio. It does not only calculate and determine the value of different assets but also finds out the market fluctuations effect on the value of tradable financial assets or instruments. Talking about Royal Bank of Canada and its subsidiaries operate under the brand name of RBC. It is among one of the Canada's largest banks in terms of its market capitalization rate and assets it holds. It is also known as the largest bank in the world when it comes to market capitalization percentage. It provides various services that includes; personal and commercial banking, wealth management, insurance and corporate affairs and investment banking. They have almost 80,000 plus employees in the shifts of full and part time who serve the clients of RBC. They have a client's portfolio of around 15 million in personal business and public sector areas and having offices in Canada, United States and 49 other countries. In 2010 the company had its total assets to around $ 726 billion approximately (www.nasdaq.com).

RY

Industry Avg

S&P/TSX RY 5Y Avg

Price/Earnings

11.8

10.8

14.9

14.3

Price/Book

2.2

1.9

1.8

2.1

Price/Sales

3.3

3.0

1.7

2.7

Price/Cash Flow

-12.7

238.1

8.2

-9.6

Analysis

RBC's common shares are presently listed on various stock exchanges that ...