Royal Bank of Canada (RY), the 10th-largest bank in the world, is scheduled to report its third-quarter financial results on August 25 before markets open.
Over the past year, the bank stock has jumped more than 30% and is currently trading close to C$130. (See Royal Bank of Canada stock charts on TipRanks)
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$2.69 in Q3 2021, indicating a growth of 20.6% from the prior-year quarter (C$2.23 per share). Revenue is expected to come in at C$12.21 billion, representing an increase of 5.9% from C$11.53 billion reported in the third quarter of 2020. RBC topped EPS estimates in the past fourth quarters.
The Delta variant of COVID-19 could have reduced RBC’s third-quarter earnings performance, as the bank might have become more cautious about releasing funds from loan loss reserves recognized earlier.
On August 18, Scotiabank analyst Meny Grauman maintained a Buy rating on the stock and a C$148 price target. This implies 12.2% upside potential.
Grauman wrote in a report, “After peaking in Q1, beats were smaller in Q2 and we expect even smaller beats in Q3.”
The rest of the Street is cautiously optimistic on RBC, with a Moderate Buy consensus rating based on five Buys and two Holds. The average Royal Bank of Canada price target of C$137.78 implies 4.4% upside potential to 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.