It is a great day to be a Canadian bank, particularly if you are Royal Bank of Canada (TSE:RY) (RY). While shares are up nearly 2.5% following its recently released earnings report, that gain was part of a much larger milestone – a new all-time high for the stock.
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RBC had what it calls a “standout quarter” after a combination of factors hit at once. First, it had an impressive showing from its domestic banking division, which saw earnings surge. The bank brought in a grand total of C$3.26 per share on an adjusted basis. That beat the consensus earnings estimate of C$2.96.
But what helped in particular was an unexpected boost of optimism. RBC kept aside less cash than many of its contemporaries did to cover bad debt, which left it with more cash available. RBC squirreled away C$659 million for bad loan coverage, which was not only less than the C$921 million analysts forecasted but also less than the C$920 million it held in the previous quarter. It was, however, up from the C$616 million it had this time last year.
All This and Dividends, Too
That extra C$261 million gave RBC quite a bit of extra breathing room, and it certainly has some plans for that money. Dave McKay, RBC’s CEO, noted that he is looking for “…an increasing level of buybacks in coming quarters to provide long-term value to shareholders.”
And, the board of directors also declared a dividend, further putting some of that extra cash to use. The dividend will be $1.42 per share, payable to common shareholders of record as of October 24, 2024, for distribution on November 22, 2024. Several other dividends were declared for a range of Non-Cumulative First Preferred Shares, payable on the same schedule. So, between dividends and buybacks, it is little wonder there was increased interest in owning RBC shares.
Is Royal Bank Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Strong Buy consensus rating on TSE:RY stock based on 11 Buys and two Holds assigned in the past three months, as indicated by the graphic below. After a 36.45% rally in its share price over the past year, the average TSE:RY price target of C$165.26 per share implies 2.92% upside potential.
