RBC Q4 Earnings Preview: What to Expect

Royal Bank of Canada (RY), the 10th-largest bank in the world, is scheduled to report its fourth-quarter financial results on December 1 before markets open.

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Stock Performance

Year-to-date the bank stock has jumped more than 22% and is currently trading close to C$127.86.

Strong earnings could drive RBC shares higher, so let’s have a look at what analysts are expecting for the fourth quarter. (See Analysts’ Top Stocks on TipRanks)

Analyst Expectations

Analysts on average expect RBC to report EPS of C$2.82 in Q4 2021, indicating a growth of 26.5% from the prior-year quarter (C$2.23 per share).

Revenue is expected to come in at C$11.98 billion, representing an increase of 8% from C$11.09 billion reported in the fourth quarter of 2020. RBC has topped EPS estimates in the past five quarters.

Points to Watch

RBC and the other big Canadian banks are expected to increase their dividends significantly as part of their quarterly earnings release this week. Analysts say they are also watching loan growth, cost inflation, and insights about the pace of recovery.

CIBC analyst Paul Holden said in a note, “We expect cost inflation to be a major topic of conversation. Following guidance provided by the U.S. banks, we expect labour costs to increase over the next year while investments in digital platforms and technology more broadly continue to grow.”

Wall Street’s Take

On November 30, BMO Capital analyst Sohrab Movahedi maintained a Hold rating on RY and a C$142 price target. This implies 11.3% upside potential.

The rest of the Street is bullish on RBC with a Moderate Buy consensus rating based on four Buys and two Holds. The average Royal Bank of Canada price target of C$145.12 implies 13.7% 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.