Comprehensive Stock Comparison
Compare Royal Bank of Canada (RY) vs HSBC Holdings plc (HSBC) Stock
Analyze side-by-side fundamentals, valuation, growth, and profitability to decide which stock is the better buy.
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Quick Verdict
| Category | Winner | Why |
|---|---|---|
| Growth | HSBC | 10.6% revenue growth vs RY's 2.1% |
| Value | HSBC | PEG 0.35 vs 0.85 |
| Quality / Margins | HSBC | 16.7% net margin vs RY's 14.8% |
| Stability / Safety | RY | Beta 0.56 vs HSBC's 0.83 |
| Dividends | HSBC | 5.0% yield, 4-year raise streak, vs RY's 2.7% |
| Momentum (1Y) | HSBC | +61.0% vs RY's +45.3% |
| Efficiency (ROA) | RY | 0.9% ROA vs HSBC's 0.5%, ROIC 2.0% vs 4.6% |
Who Each Stock Is For
Income & stability
Growth exposure
Long-term compounding (10Y)
Sleep-well-at-night portfolio
Valuation efficiency (growth/$)
Defensive / Recession hedge
Business Model
What each company does and how it makes money
Royal Bank of Canada is a diversified financial services institution operating primarily in Canada and internationally. It generates revenue mainly through personal and commercial banking (roughly 50% of earnings), wealth management, capital markets, and insurance services. The bank's competitive advantage lies in its dominant Canadian retail banking franchise — the largest in the country — supported by extensive branch networks and long-standing customer relationships.
HSBC is a global banking and financial services institution operating across retail, commercial, and investment banking. It generates revenue primarily through net interest income from lending activities (about 60% of total income) and fee-based income from transaction services, wealth management, and investment banking. Its key competitive advantage is its unique global network—particularly its dominant position in Asia and strong connectivity between East and West—which enables cross-border banking services few competitors can match.
Financial Metrics Comparison
Side-by-side fundamentals across 2 stocks. BestLagging
Financial Scorecard
HSBC leads in 5 of 6 categories — strongest in Financial Metrics and Valuation Metrics. 1 category is tied.
Financial Metrics (TTM)
HSBC and RY operate at a comparable scale, with $143.3B and $137.4B in trailing revenue. Profitability is closely matched — net margins range from 16.7% (HSBC) to 14.8% (RY).
| Metric | RYRoyal Bank of Can… | HSBCHSBC Holdings plc |
|---|---|---|
| RevenueTrailing 12 months | $137.4B | $143.3B |
| EBITDAEarnings before interest/tax | $28.7B | $28.6B |
| Net IncomeAfter-tax profit | $20.4B | $17.7B |
| Free Cash FlowCash after capex | $53.0B | $0 |
| Gross MarginGross profit ÷ Revenue | +45.3% | +47.0% |
| Operating MarginEBIT ÷ Revenue | +18.7% | +22.5% |
| Net MarginNet income ÷ Revenue | +14.8% | +16.7% |
| FCF MarginFCF ÷ Revenue | +38.6% | +42.9% |
| Rev. Growth (YoY)Latest quarter vs prior year | — | — |
| EPS Growth (YoY)Latest quarter vs prior year | +28.9% | -17.6% |
Valuation Metrics
At 15.0x trailing earnings, HSBC trades at a 7% valuation discount to RY's 16.2x P/E. Adjusting for growth (PEG ratio), HSBC offers better value at 0.46x vs RY's 1.30x — a lower PEG means you pay less per unit of expected earnings growth.
| Metric | RYRoyal Bank of Can… | HSBCHSBC Holdings plc |
|---|---|---|
| Market CapShares × price | $234.2B | $319.8B |
| Enterprise ValueMkt cap + debt − cash | $780.4B | $277.7B |
| Trailing P/EPrice ÷ TTM EPS | 16.24x | 15.03x |
| Forward P/EPrice ÷ next-FY EPS est. | 10.58x | 11.63x |
| PEG RatioP/E ÷ EPS growth rate | 1.30x | 0.46x |
| EV / EBITDAEnterprise value multiple | 37.17x | 7.63x |
| Price / SalesMarket cap ÷ Revenue | 2.33x | 2.23x |
| Price / BookPrice ÷ Book value/share | 2.32x | 1.79x |
| Price / FCFMarket cap ÷ FCF | 6.05x | 5.21x |
Profitability & Efficiency
RY delivers a 14.6% return on equity — every $100 of shareholder capital generates $15 in annual profit, vs $9 for HSBC. HSBC carries lower financial leverage with a 1.26x debt-to-equity ratio, signaling a more conservative balance sheet compared to RY's 6.00x. On the Piotroski fundamental quality scale (0–9), HSBC scores 7/9 vs RY's 6/9, reflecting strong financial health.
| Metric | RYRoyal Bank of Can… | HSBCHSBC Holdings plc |
|---|---|---|
| ROE (TTM)Return on equity | +14.6% | +8.9% |
| ROA (TTM)Return on assets | +0.9% | +0.5% |
| ROICReturn on invested capital | +2.0% | +4.6% |
| ROCEReturn on capital employed | +3.5% | +2.6% |
| Piotroski ScoreFundamental quality 0–9 | 6 | 7 |
| Debt / EquityFinancial leverage | 6.00x | 1.26x |
| Net DebtTotal debt minus cash | $747.6B | -$42.2B |
| Cash & Equiv.Liquid assets | $87.4B | $284.5B |
| Total DebtShort + long-term debt | $835.0B | $242.3B |
| Interest CoverageEBIT ÷ Interest expense | 0.36x | 0.39x |
Total Returns (with DRIP)
A $10,000 investment in HSBC five years ago would be worth $35,948 today (with dividends reinvested), compared to $21,571 for RY. Over the past 12 months, HSBC leads with a +61.0% total return vs RY's +45.3%. The 3-year compound annual growth rate (CAGR) favors HSBC at 39.1% vs RY's 21.0% — a key indicator of consistent wealth creation.
| Metric | RYRoyal Bank of Can… | HSBCHSBC Holdings plc |
|---|---|---|
| YTD ReturnYear-to-date | -1.4% | +15.8% |
| 1-Year ReturnPast 12 months | +45.3% | +61.0% |
| 3-Year ReturnCumulative with dividends | +77.2% | +169.3% |
| 5-Year ReturnCumulative with dividends | +115.7% | +259.5% |
| 10-Year ReturnCumulative with dividends | +295.9% | +267.7% |
| CAGR (3Y)Annualised 3-year return | +21.0% | +39.1% |
Risk & Volatility
RY is the less volatile stock with a 0.56 beta — it tends to amplify market swings less than HSBC's 0.83 beta. A beta below 1.0 means the stock typically moves less than the S&P 500. HSBC currently trades 98.3% from its 52-week high vs RY's 94.9% drawdown — a narrower gap to the peak suggests stronger recent price momentum.
| Metric | RYRoyal Bank of Can… | HSBCHSBC Holdings plc |
|---|---|---|
| Beta (5Y)Sensitivity to S&P 500 | 0.56x | 0.83x |
| 52-Week HighHighest price in past year | $176.19 | $94.80 |
| 52-Week LowLowest price in past year | $106.10 | $45.66 |
| % of 52W HighCurrent price vs 52-week peak | +94.9% | +98.3% |
| RSI (14)Momentum oscillator 0–100 | 49.2 | 69.1 |
| Avg Volume (50D)Average daily shares traded | 1.2M | 1.8M |
Analyst Outlook
Wall Street rates RY as "Hold" and HSBC as "Hold". Consensus price targets imply -25.3% upside for RY (target: $125) vs -44.2% for HSBC (target: $52). For income investors, HSBC offers the higher dividend yield at 4.96% vs RY's 2.73%.
| Metric | RYRoyal Bank of Can… | HSBCHSBC Holdings plc |
|---|---|---|
| Analyst RatingConsensus buy/hold/sell | Hold | Hold |
| Price TargetConsensus 12-month target | $124.85 | $52.00 |
| # AnalystsCovering analysts | 29 | 19 |
| Dividend YieldAnnual dividend ÷ price | +2.7% | +5.0% |
| Dividend StreakConsecutive years of raises | 2 | 4 |
| Dividend / ShareAnnual DPS | $6.24 | $4.63 |
| Buyback YieldShare repurchases ÷ mkt cap | +4.2% | +3.7% |
Historical Charts
Charts are rendered on first load. Hover for details.
Chart 1Total Return — 5 Years (Rebased to 100)
| Stock | Mar 20 | Feb 26 | Change |
|---|---|---|---|
| Royal Bank of Canada (RY) | 100 | 219.72 | +119.7% |
| HSBC Holdings plc (HSBC) | 100 | 265.32 | +165.3% |
HSBC Holdings plc (HSBC) returned +259% over 5 years vs Royal Bank of Canada (RY)'s +116%. A $10,000 investment in HSBC 5 years ago would be worth $35,948 today (including dividends reinvested).
Chart 2Revenue Growth — 10 Years
| Stock | 2016 | 2025 | Change |
|---|---|---|---|
| Royal Bank of Canada (RY) | $46.0B | $137.4B | +198.7% |
| HSBC Holdings plc (HSBC) | $74.6B | $143.3B | +92.1% |
Royal Bank of Canada's revenue grew from $46.0B (2016) to $137.4B (2025) — a 12.9% CAGR.
Chart 3Net Margin Trend — 10 Years
| Stock | 2016 | 2025 | Change |
|---|---|---|---|
| Royal Bank of Canada (RY) | 22.6% | 14.8% | -34.5% |
| HSBC Holdings plc (HSBC) | 3.3% | 16.7% | +403.4% |
Royal Bank of Canada's net margin went from 23% (2016) to 15% (2025).
Chart 4P/E Ratio History — 9 Years
| Stock | 2017 | 2025 | Change |
|---|---|---|---|
| Royal Bank of Canada (RY) | 10.8 | 12.1 | +12.0% |
| HSBC Holdings plc (HSBC) | 21.5 | 8 | -62.8% |
Royal Bank of Canada has traded in a 8x–12x P/E range over 9 years; current trailing P/E is ~16x. HSBC Holdings plc has traded in a 7x–27x P/E range over 8 years; current trailing P/E is ~15x.
Chart 5EPS Growth — 10 Years
| Stock | 2016 | 2025 | Change |
|---|---|---|---|
| Royal Bank of Canada (RY) | 6.78 | 14.09 | +107.8% |
| HSBC Holdings plc (HSBC) | 0.35 | 6.2 | +1671.4% |
Royal Bank of Canada's EPS grew from $6.78 (2016) to $14.09 (2025) — a 8% CAGR.
Chart 6Free Cash Flow — 5 Years
Royal Bank of Canada generated $53B FCF in 2025 (-10% vs 2021). HSBC Holdings plc generated $61B FCF in 2024 (-39% vs 2021).
RY vs HSBC: Frequently Asked Questions
9 questions · data-driven answers · updated daily
01Is RY or HSBC a better buy right now?
HSBC Holdings plc (HSBC) offers the better valuation at 15.0x trailing P/E (11.6x forward), making it the more compelling value choice. Analysts rate Royal Bank of Canada (RY) a "Hold" — based on 29 analyst ratings — the highest consensus in this comparison. The "better buy" depends entirely on your goals: growth investors should weight revenue trajectory, value investors should weight P/E and PEG, and income investors should weight dividend yield and streak.
02Which has the better valuation — RY or HSBC?
On trailing P/E, HSBC Holdings plc (HSBC) is the cheapest at 15.0x versus Royal Bank of Canada at 16.2x. On forward P/E, Royal Bank of Canada is actually cheaper at 10.6x — notably different from the trailing picture, reflecting expected earnings growth. The PEG ratio (P/E divided by earnings growth rate) is the most growth-adjusted single valuation metric: HSBC Holdings plc wins at 0.35x versus Royal Bank of Canada's 0.85x — a PEG below 1.0 traditionally signals the market is underpricing earnings growth.
03Which is the better long-term investment — RY or HSBC?
Over the past 5 years, HSBC Holdings plc (HSBC) delivered a total return of +259.5%, compared to +115.7% for Royal Bank of Canada (RY). A $10,000 investment in HSBC five years ago would be worth approximately $36K today (assuming dividends reinvested). Over 10 years, the gap is even starker: RY returned +295.9% versus HSBC's +267.7%. Past returns do not guarantee future results, and the stock with the higher historical return may already have its best growth priced in.
04Which is safer — RY or HSBC?
By beta (market sensitivity over 5 years), Royal Bank of Canada (RY) is the lower-risk stock at 0.56β versus HSBC Holdings plc's 0.83β — meaning HSBC is approximately 49% more volatile than RY relative to the S&P 500. On balance sheet safety, HSBC Holdings plc (HSBC) carries a lower debt/equity ratio of 126% versus 6% for Royal Bank of Canada — giving it more financial flexibility in a downturn.
05Which has better profit margins — RY or HSBC?
HSBC Holdings plc (HSBC) is the more profitable company, earning 16.7% net margin versus 14.8% for Royal Bank of Canada — meaning it keeps 16.7% of every revenue dollar as bottom-line profit. Operating margin tells a similar story: HSBC leads at 22.5% versus 18.7% for RY. At the gross margin level — before operating expenses — HSBC leads at 47.0%, reflecting greater pricing power or product mix advantage. Stronger margins indicate durable pricing power, lower cost of revenue, or higher mix of software/services. They are one of the clearest signs of business quality.
06Is RY or HSBC more undervalued right now?
The PEG ratio (forward P/E divided by expected earnings growth rate) is the most precise measure of undervaluation relative to growth potential. By this metric, HSBC Holdings plc (HSBC) is the more undervalued stock at a PEG of 0.35x versus Royal Bank of Canada's 0.85x. A PEG below 1.0 is traditionally considered the threshold for growth-adjusted undervaluation. On forward earnings alone, Royal Bank of Canada (RY) trades at 10.6x forward P/E versus 11.6x for HSBC Holdings plc — 1.0x cheaper on a one-year earnings basis. Analyst consensus price targets imply the most upside for RY: -25.3% to $124.85.
07Which pays a better dividend — RY or HSBC?
All stocks in this comparison pay dividends. HSBC Holdings plc (HSBC) offers the highest yield at 5.0%, versus 2.7% for Royal Bank of Canada (RY).
08Is RY or HSBC better for a retirement portfolio?
For long-horizon retirement investors, Royal Bank of Canada (RY) is the stronger choice — it scores higher on the combination of lower volatility, dividend reliability, and long-term compounding (low volatility (β 0.56), 2.7% yield, +295.9% 10Y return). Both have compounded well over 10 years (RY: +295.9%, HSBC: +267.7%), confirming both are viable long-term holds — but the lower-volatility option typically results in less emotional selling during corrections. Retirement portfolios generally favour predictability over maximum returns. Consult a financial advisor before making allocation decisions.
09What are the main differences between RY and HSBC?
Both stocks operate in the Financial Services sector, making this a peer-level intra-sector comparison — the same macro tailwinds and headwinds will affect both. These fundamental differences mean investors should not choose between them on a single metric — the "better stock" depends entirely on which of these characteristics aligns with your investment strategy.
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