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Rating Change Detail - ROYAL BANK OF CANADA (USA) (RY) - 3/7/2013
The stock was upgraded from No Interest to Some Interest on 3/7/2013 by the P/E/Growth Investor Strategy based on the principles of Peter Lynch. The score according to this strategy rose from 0% to 81%. A full detailed analysis of RY using this strategy is included below. For a full detailed analysis of RY using 12 proven strategies of Wall Street Legends, take a free trial to Validea.com

Detailed Analysis of ROYAL BANK OF CANADA (USA) (RY)

Strategy: P/E/Growth Investor - Based on: Peter Lynch

DETERMINE THE CLASSIFICATION:

According to this methodology, RY is a "Slow Grower", based on its single digit earnings growth of 8.47%, based on the average of the 3, 4 and 5 year historical eps growth rates.

SALES: [PASS]

RY would fall into the "Dividend Payers" category according to this methodology. The first requirement of a Slow Grower is that its sales exceed one billion. RY's sales are $20,310 million. It passes the test.

YIELD COMPARED TO THE S&P 500: [PASS]

This methodology also maintains that the Yield of a "Slow Grower" should be high, which includes being higher than the S&P average (currently 2.39%), and at least 3%. This yield is required because dividends are the main reason for investing in "Slow Growers". The yield for RY is 3.99% so it passes this test.

YIELD ADJUSTED P/E/GROWTH (PEG) RATIO: [PASS]

This methodology would consider the Yield-adjusted P/E/G ratio for RY of 0.99, based on the average of the 3, 4 and 5 year historical eps growth rates, to be good.

TOTAL DEBT/EQUITY RATIO: [NEUTRAL]

RY is a financial company so debt to equity rules are not applied to determine the company's financial soundness.

EQUITY/ASSETS RATIO: [PASS]

This methodology uses the Equity/Assets Ratio as a way to determine a financial intermediary's health, as it is a better measure than the Debt/Equity Ratio. RY's Equity/Assets ratio (5.00%) is healthy and above the minimum 5% this methodology looks for, thus passing the criterion.

RETURN ON ASSETS: [FAIL]

This methodology uses Return on Assets as a way to measure a financial intermediary's profitability. RY's ROA (0.94%) is below the minimum 1% that this methodology looks for, thus failing the criterion.

FREE CASH FLOW: [NEUTRAL]

The Free Cash Flow/Price ratio, though not a requirement, is considered a bonus if it is above 35%. A positive Cash Flow (the higher the better) separates a wonderfully reliable investment from a shaky one. This methodology prefers not to invest in companies that rely heavily on capital spending. This ratio for RY (-7.21%) is too low to add to the attractiveness of the stock. Keep in mind, however, that it does not adversely affect the company as it is a bonus criteria.

NET CASH POSITION: [NEUTRAL]

Another bonus for a company is having a Net Cash/Price ratio above 30%. Lynch defines net cash as cash and marketable securities minus long term debt. According to this methodology, a high value for this ratio dramatically cuts down on the risk of the security. The Net Cash/Price ratio for RY (2.04%) is too low to add to the attractiveness of this company. Keep in mind, however, that it does not adversely affect the company as it is a bonus criteria.

For a full detailed analysis of RY using 12 proven strategies of Wall Street Legends,
take a free trial to Validea.com

Rating Change Detail - ROYAL BANK OF CANADA (USA) (RY) - 3/7/2013

Detailed Analysis of ROYAL BANK OF CANADA (USA) (RY)

Strategy: P/E/Growth Investor - Based on: Peter Lynch