Royal Bank of Canada Earnings Preview: Here’s What to Watch for


Royal Bank of Canada (RY), the second-largest bank in Canada by assets, is scheduled to report its second-quarter financial results on May 27 before markets open. Over the past year, the bank stock has jumped nearly 50% and is currently trading close to C$125.00. Strong earnings could drive RBC shares higher, so let’s have a look at what analysts are expecting for the second quarter.

Analysts on average expect RBC to report adjusted EPS of C$2.48 in Q2 2021, indicating a growth of 141% from the prior-year quarter (C$1.03 per share). Revenue is expected to come in at C$11.77 billion, representing an increase of 14% from C$10.33 billion reported in the second quarter of 2020.

RBC topped EPS estimates in the past three quarters. The Canadian bank is likely to beat estimates again in Q2 2021 due to increased activity in capital markets and the release of reserves on loan losses. (See Royal Bank of Canada stock analysis on TipRanks)

Last month, CFRA analyst Pauline Bell maintained a Buy rating on the stock and a $94.00 (C$113.35) price target, for 8.6% downside potential.

Bell said RBC had been relatively protected from the impact of low-interest rates compared with other Canadian banks, as the bank’s cautious mortgage lending and significant reserve build are expected to reduce risks in its secured real estate portfolio. Plus, the analyst believes the growing presence of RBC in the U.S. offers a unique growth opportunity compared to many of its Canadian counterparts. She is forecasting revenue growth of 2% to 4% in fiscal 2021.

The rest of the Street is bullish on RBC with a Strong Buy consensus rating based on 10 Buys and 3 Holds. The average analyst price target of C$126.11 implies 1.7% upside potential from current levels.

TipRanks’ Smart Score

RBC scores a 9 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform the overall market.

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