Royal Bank of Canada (RY) & Citigroup (C) Head-To-Head Analysis

Royal Bank of Canada (NYSE: RY) and Citigroup (NYSE:C) are both large-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, risk, valuation, profitability, institutional ownership and dividends.

Earnings and Valuation

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This table compares Royal Bank of Canada and Citigroup’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Royal Bank of Canada $40.37 billion 2.76 $8.74 billion $5.87 13.13
Citigroup $87.97 billion 1.98 -$6.80 billion ($3.10) -21.90

Royal Bank of Canada has higher earnings, but lower revenue than Citigroup. Citigroup is trading at a lower price-to-earnings ratio than Royal Bank of Canada, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Royal Bank of Canada has a beta of 1.12, meaning that its stock price is 12% more volatile than the S&P 500. Comparatively, Citigroup has a beta of 1.51, meaning that its stock price is 51% more volatile than the S&P 500.

Profitability

This table compares Royal Bank of Canada and Citigroup’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Royal Bank of Canada 21.64% 17.60% 0.96%
Citigroup -7.05% 7.61% 0.83%

Dividends

Royal Bank of Canada pays an annual dividend of $2.88 per share and has a dividend yield of 3.7%. Citigroup pays an annual dividend of $1.28 per share and has a dividend yield of 1.9%. Royal Bank of Canada pays out 49.1% of its earnings in the form of a dividend. Citigroup pays out -41.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Royal Bank of Canada has raised its dividend for 3 consecutive years. Royal Bank of Canada is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current ratings for Royal Bank of Canada and Citigroup, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Royal Bank of Canada 1 6 2 0 2.11
Citigroup 1 9 12 0 2.50

Royal Bank of Canada currently has a consensus target price of $100.50, indicating a potential upside of 30.42%. Citigroup has a consensus target price of $81.39, indicating a potential upside of 19.87%. Given Royal Bank of Canada’s higher possible upside, equities analysts clearly believe Royal Bank of Canada is more favorable than Citigroup.

Institutional and Insider Ownership

41.5% of Royal Bank of Canada shares are held by institutional investors. Comparatively, 80.1% of Citigroup shares are held by institutional investors. 0.1% of Citigroup shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

Royal Bank of Canada beats Citigroup on 10 of the 17 factors compared between the two stocks.

About Royal Bank of Canada

Royal Bank of Canada, together with its subsidiaries, operates as a diversified financial service company worldwide. The company's Personal & Commercial Banking segment offers personal and business banking services, as well as auto financing and retail investment products. This segment also provides a suite of financial products and services to individual, business clients, and public institutions through its branch, automated teller machines, online, mobile, and telephone banking networks, as well as through sales professionals. Its Wealth Management segment offers a suite of investment, trust, banking, credit, and other wealth management solutions to high net worth and ultra-high net worth clients; and asset management products and services directly to institutional and individual clients through its distribution channels and third-party distributors. The company's Insurance segment provides life, health, home, auto, travel, wealth, group, and reinsurance products and solutions through retail insurance branches, field sales representatives, advice centers, and online network, as well as through independent insurance advisors and affinity relationships. Its Investor and Treasury Services segment offers asset services, custody, payments, and treasury services for financial and other institutional investors. This segment also provides cash management, correspondent banking, and trade finance for financial institutions; and short-term funding and liquidity management services. The company's Capital Markets segment offers corporate and investment banking, as well as equity and debt origination, distribution, and structuring and trading for public and private companies, institutional investors, governments, and central banks. Royal Bank of Canada was founded in 1864 and is headquartered in Toronto, Canada.

About Citigroup

Citigroup Inc., a diversified financial services holding company, provides various financial products and services for consumers, corporations, governments, and institutions. The company operates through two segments, Global Consumer Banking (GCB) and Institutional Clients Group (ICG). The GCB segment offers traditional banking services to retail customers through retail banking, commercial banking, Citi-branded cards, and Citi retail services. It also provides various banking, credit card lending, and investment services through a network of local branches, offices, and electronic delivery systems. The ICG segment provides wholesale banking products and services, including fixed income and equity sales and trading, foreign exchange, prime brokerage, derivative services, equity and fixed income research, corporate lending, investment banking and advisory services, private banking, cash management, trade finance, and securities services to corporate, institutional, public sector, and high-net-worth clients. The company operates in North America, Latin America, Asia, Europe, the Middle East, and Africa. Citigroup Inc. was founded in 1812 and is based in New York, New York.

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