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Royal Bank Of Canada (TSE:RY)
TSX:RY
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Royal Bank Of Canada
(TSX:RY)
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Rating:75Outperform
Price Target:
C$224.00
â–²(11.16% Upside)
Royal Bank of Canada's strong financial performance and positive earnings call sentiment are the most significant factors driving the score. The stock's technical indicators suggest potential overbought conditions, which could lead to a short-term correction. The valuation is reasonable, providing a balanced outlook for investors.
Positive Factors
Negative Factors
Royal Bank Of Canada (RY) vs. iShares MSCI Canada ETF (EWC)
Market Cap
$283.13B
Dividend Yield2.94%
Average Volume (3M)2.88M
Price to Earnings (P/E)15.2
Beta (1Y)0.86
Revenue Growth3.48%
EPS Growth17.81%
CountryCA
Employees94,624
SectorFinancial
Sector Strength70
IndustryBanks - Diversified
Share Statistics
EPS (TTM)3.84
Shares Outstanding1,404,990,100
10 Day Avg. Volume2,232,237
30 Day Avg. Volume2,879,948
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap1.93
Enterprise Value/Revenue4.66
Enterprise Value/Gross Profit8.97
Enterprise Value/Ebitda19.61
Forecast
1Y Price Target
$211.11Price Target Upside4.76% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering9
Royal Bank Of Canada Business Overview & Revenue Model
Company DescriptionRoyal Bank of Canada operates as a diversified financial service company worldwide. The company's Personal & Commercial Banking segment offers checking and savings accounts, home equity financing, personal lending, private banking, indirect lending, including auto financing, mutual funds and self-directed brokerage accounts, guaranteed investment certificates, credit cards, and payment products and solutions; and lending, leasing, deposit, investment, foreign exchange, cash management, auto dealer financing, trade products, and services to small and medium-sized commercial businesses. This segment offers financial products and services through branches, automated teller machines, and mobile sales network. Its Wealth Management segment provides a suite of advice-based solutions and strategies to high net worth and ultra-high net worth individuals, and institutional clients. The company's Insurance segment offers life, health, home, auto, travel, wealth, annuities, and reinsurance advice and solutions; and business insurance services to individual, business, and group clients through its advice centers, RBC insurance stores, and mobile advisors; digital, mobile, and social platforms; independent brokers; and travel partners. Its Investor & Treasury Services segment provides asset servicing, custody, payments, and treasury services to financial and other investors; and fund and investment administration, shareholder, private capital, performance measurement and compliance monitoring, distribution, transaction banking, cash and liquidity management, foreign exchange, and global securities finance services. The company's Capital Markets segment offers corporate and investment banking, as well as equity and debt origination, distribution, advisory services, sale, and trading services for corporations, institutional investors, asset managers, private equity firms, and governments. The company was founded in 1864 and is headquartered in Toronto, Canada.
How the Company Makes MoneyRoyal Bank of Canada's revenue model is primarily based on interest income, fee-based income, and trading revenues. The majority of its revenue comes from Personal & Commercial Banking, which earns interest from loans and mortgages, as well as fees from various banking transactions. Wealth Management contributes significantly through asset management fees and commissions from financial products. Insurance operations generate premiums and investment income, while Capital Markets focuses on trading, investment banking, and advisory services. Additionally, RBC's Investor & Treasury Services provides custody and administration services, which further contribute to its revenue. Strategic partnerships and a strong digital banking presence also enhance its earnings potential.
Royal Bank Of Canada Earnings Call Summary
Earnings Call Date:Aug 27, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Dec 03, 2025
Earnings Call Sentiment Positive
The earnings call highlighted RBC's strong financial performance driven by record earnings and substantial growth in revenue across multiple segments, particularly in Capital Markets and Wealth Management. However, the bank remains cautious due to geopolitical risks, trade uncertainties, and elevated credit provisions, which could impact future performance. Despite these challenges, the overall sentiment remains positive due to the strong results and strategic initiatives in place.Q3-2025 Updates
Positive Updates
Record Third Quarter Earnings
RBC reported record third quarter earnings of $5.4 billion, up 21% or over $900 million from the previous year, with a strong return on equity of over 17% for the quarter.
Strong Revenue Growth Across Segments
Revenue reached $17 billion this quarter, including record revenue in Capital Markets and double-digit growth in Personal Banking and Wealth Management.
Capital Markets Performance
Capital Markets reported record revenue of $3.8 billion, pre-provision pretax earnings of $1.7 billion, and net income of $1.3 billion, driven by strong results in Global Markets and Corporate Investment Banking.
Wealth Management Growth
Double-digit growth in assets under administration in both Canadian and U.S. Wealth Management, with significant market appreciation and net new client assets.
HSBC Canada Acquisition Synergies
Realization of $740 million in annualized cost synergies from the acquisition of HSBC Bank Canada, contributing to strong operating leverage.
Negative Updates
Geopolitical and Trade Policy Risks
Uncertainty around trade policy, particularly China's levy against Canada's canola exports and potential renegotiation of CUSMA, poses risks to consumer confidence and corporate profit margins.
Elevated Credit Loss Provisions
Provisions on impaired loans were up, with commercial banking PCLs remaining elevated due to softer economic conditions and ongoing trade uncertainty.
Challenges in Commercial Real Estate
Growth in commercial banking moderated to 6% year-over-year, with challenges noted in more tariff-sensitive sectors and cyclical headwinds in commercial real estate.
Softer Canadian Economy Impacts
The Canadian economy shows signs of softness, impacting sectors such as transportation, industrial products, and consumer discretionary, contributing to elevated impairments.
Company Guidance
During the RBC 2025 Third Quarter Results Conference Call, RBC reported record earnings of $5.4 billion, marking a 21% increase from the previous year, alongside a robust return on equity (ROE) of over 17% for the quarter. The bank's capital strength was highlighted with a CET1 ratio of 13.2%, and gross capital generation contributed 77 basis points. Revenue reached $17 billion, bolstered by significant gains in Capital Markets and double-digit growth in Personal Banking and Wealth Management. In terms of guidance, RBC anticipates maintaining an ROE of at least 16% in fiscal 2026, amidst a backdrop of geopolitical risks and trade uncertainties. The bank's diversified business model, strategic investments, and focus on cost synergies, particularly from the acquisition of HSBC Bank Canada, underpin its positive outlook, despite external challenges.Royal Bank Of Canada Financial Statement Overview
Summary
Royal Bank of Canada demonstrates strong revenue growth and profitability, with robust cash flow generation. However, the high leverage poses potential risks, and declining margins may indicate rising costs or competitive challenges. Overall, the financial health is solid, but careful management of debt and costs is essential.Income Statement
The income statement shows strong revenue growth with a 20.54% increase in TTM, indicating robust business expansion. Gross profit margin is healthy at 51.92%, and net profit margin is solid at 16.29%. However, the margins have decreased compared to previous years, suggesting increased costs or competitive pressures.85
Very Positive
Balance Sheet
The balance sheet reflects a high debt-to-equity ratio of 5.83, indicating significant leverage, which could pose risks if interest rates rise. Return on equity is strong at 14.50%, showing efficient use of equity. The equity ratio is relatively low, suggesting reliance on debt financing.70
Positive
Cash Flow
Cash flow analysis reveals a positive free cash flow growth of 7.57% in TTM, indicating good cash generation. The operating cash flow to net income ratio is low at 0.06, suggesting potential issues in converting income to cash. However, the free cash flow to net income ratio is high at 97.29%, showing strong cash flow relative to earnings.78
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 117.58B | 134.49B | 53.66B | 48.77B | 49.54B | 47.10B |
| Gross Profit | 61.04B | 54.26B | 56.26B | 48.77B | 49.54B | 47.10B |
| EBITDA | 27.92B | 27.28B | 21.45B | 22.63B | 23.06B | 16.92B |
| Net Income | 19.15B | 16.23B | 14.86B | 15.79B | 16.04B | 11.43B |
Balance Sheet | ||||||
| Total Assets | 2.23T | 2.17T | 2.00T | 1.92T | 1.71T | 1.62T |
| Cash, Cash Equivalents and Short-Term Investments | 440.33B | 167.13B | 212.00B | 240.60B | 231.03B | 297.64B |
| Total Debt | 789.67B | 474.20B | 439.35B | 425.18B | 305.05B | 9.87B |
| Total Liabilities | 2.09T | 2.04T | 1.89T | 1.81T | 1.61T | 1.54T |
| Stockholders Equity | 135.56B | 127.09B | 117.66B | 108.06B | 98.67B | 86.66B |
Cash Flow | ||||||
| Free Cash Flow | 84.81B | 20.86B | 23.35B | 19.44B | 58.86B | 136.19B |
| Operating Cash Flow | 87.17B | 23.14B | 26.08B | 21.94B | 61.04B | 138.82B |
| Investing Cash Flow | -99.01B | -20.89B | -28.27B | -57.05B | -57.35B | -39.56B |
| Financing Cash Flow | -8.98B | -8.15B | -9.83B | -2.19B | -5.93B | -7.75B |
Royal Bank Of Canada Technical Analysis
Positive
201.52
Price Trends
188.05
Positive
179.95
Positive
172.74
Positive
Market Momentum
3.96
Positive
73.22
Negative
55.17
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:RY, the sentiment is Positive. The current price of 201.52 is above the 20-day moving average (MA) of 197.71, above the 50-day MA of 188.05, and above the 200-day MA of 172.74, indicating a bullish trend. The MACD of 3.96 indicates Positive momentum. The RSI at 73.22 is Negative, neither overbought nor oversold. The STOCH value of 55.17 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:RY.
Royal Bank Of Canada Peers Comparison
Overall Rating
UnderperformOutperform
Sector (68)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | 103.23B | 13.27 | 12.99% | 3.45% | -0.39% | 20.28% | |
78 Outperform | 58.93B | 14.61 | 0.00% | 3.03% | 9.25% | 0.34% | |
75 Outperform | $283.13B | 15.17 | 14.60% | 2.94% | 3.48% | 17.81% | |
74 Outperform | 127.96B | 15.63 | 10.06% | 3.89% | 1.78% | 32.32% | |
74 Outperform | 189.15B | 9.16 | 16.66% | 3.86% | 7.92% | 175.59% | |
71 Outperform | 110.57B | 16.60 | 0.00% | 6.13% | -2.54% | -6.66% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% |
* Financial Sector Average
Performance Comparison
TSE:RY
Royal Bank Of Canada
201.52
40.21
24.93%
BMO
Bank Of Montreal
129.73
44.89
52.91%
BNS
Bank Of Nova Scotia
64.64
14.59
29.15%
CM
Canadian Bank of Commerce
80.24
21.20
35.91%
TD
Toronto Dominion Bank
78.40
17.06
27.81%
NTIOF
National Bank of Canada
109.07
17.89
19.62%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.