RBC Q1 Earnings Preview: What to Expect

Royal Bank of Canada (TSE: RY) (NYSE: RY), the world’s 10th largest bank, is scheduled to report its Q1 2022 results on February 24 before markets open.

Stock Performance

Year-to-date the bank stock has jumped by approximately 6% and is currently trading over C$141.

Analysts Expectations

Analysts on average expect RBC to report EPS of C$2.74 in Q1 2022, indicating a growth of 3% from the prior-year quarter (C$2.66 per share).

Revenue is expected to come in at C$12.12 billion, representing a decrease of 6.3% from C$12.94 billion reported in the first quarter of 2021.

Points to Watch

Scotiabank analyst Meny Grauman said in a note that analysts will be watching for any changes in Canadian banks’ outlook on how they expect higher rates to play out, as central banks in Canada and the United States are expected to start raising rates in March.

She said, “The outlook for rates and the impact this will have on earnings should remain the top concern for investors heading into the first quarter reports.”

Grauman added that spending will be another key trend to watch as wages and other costs rise in the competitive growth environment and banks invest heavily in technology.

Wall Street’s Take

On February 18, Grauman kept a Buy rating on RY and raised its price target to C$162 (from C$146). This implies 14.7% upside potential.

The rest of the Street is cautiously optimistic on RBC with a Moderate Buy consensus rating based on five Buys and four Holds. The average Royal Bank of Canada price target of C$152.58 implies 7.9% upside potential to current levels.

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