Royal Bank of Canada (NYSE:RY) and Barclays (NYSE:BCS) are both large-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, dividends, institutional ownership, risk, profitability, analyst recommendations and earnings.
Dividends
Royal Bank of Canada pays an annual dividend of $3.39 per share and has a dividend yield of 3.7%. Barclays pays an annual dividend of $0.05 per share and has a dividend yield of 0.5%. Royal Bank of Canada pays out 57.2% of its earnings in the form of a dividend. Barclays pays out 4.0% 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 1 consecutive years. Royal Bank of Canada is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Analyst Ratings
This is a summary of recent ratings and target prices for Royal Bank of Canada and Barclays, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
---|
Royal Bank of Canada | 0 | 3 | 10 | 0 | 2.77 |
Barclays | 1 | 5 | 7 | 0 | 2.46 |
Royal Bank of Canada presently has a consensus price target of $121.2973, suggesting a potential upside of 31.05%. Given Royal Bank of Canada's stronger consensus rating and higher possible upside, research analysts plainly believe Royal Bank of Canada is more favorable than Barclays.
Earnings & Valuation
This table compares Royal Bank of Canada and Barclays' top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
Royal Bank of Canada | $45.54 billion | 2.90 | $8.50 billion | $5.93 | 15.61 |
Barclays | $27.62 billion | 1.59 | $4.18 billion | $1.25 | 8.08 |
Royal Bank of Canada has higher revenue and earnings than Barclays. Barclays 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.
Institutional and Insider Ownership
40.8% of Royal Bank of Canada shares are held by institutional investors. Comparatively, 1.9% of Barclays shares are held by institutional investors. 0.0% of Barclays shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Profitability
This table compares Royal Bank of Canada and Barclays' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
Royal Bank of Canada | 18.78% | 14.84% | 0.73% |
Barclays | 9.05% | 3.22% | 0.16% |
Volatility and Risk
Royal Bank of Canada has a beta of 0.99, suggesting that its share price is 1% less volatile than the S&P 500. Comparatively, Barclays has a beta of 1.58, suggesting that its share price is 58% more volatile than the S&P 500.
Summary
Royal Bank of Canada beats Barclays on 13 of the 17 factors compared between the two stocks.