Royal Bank of Canada (TSE:RY) is rising on earnings

While not all Canadian bank corporate earnings reports have been positive recently, most have been at least somewhat good so far. Royal Bank of Canada (TSE:RY), meanwhile, blew it out of the park with its earnings report, as shares rallied more than 4.5% in Thursday morning trading.

Several indicators reported by Royal Bank of Canada performed not only well, but even improved significantly compared to the previous year. It reported earnings of C$2.74 per diluted share, up from C$2.60 per diluted share at this time last year. Meanwhile, adjusted earnings came in at C$2.92, which not only topped the previous year’s C$2.68, but also far exceeded analyst expectations of C$2.75. Meanwhile, revenues performed even better. It amounted to C$14.15 billion, up from C$12.45 billion recorded a year earlier. The only thing that did not welcome an increase was Royal Bank of Canada’s bad loan reserve, which was increased from C$600 million last year to C$920 million this quarter.

Redemptions and dividends

This is great news and the Royal Bank of Canada is not too proud to distribute the wealth accordingly. First, it raised its dividend to C$1.42 per share, up from C$1.38 previously. It’s not a huge jump, especially when paid quarterly, but any increase is a good increase, especially when it comes to dividends. At the same time, it announced that it intends to buy back as many as 30 million shares outstanding, which should correspondingly increase the value of shares outstanding. Although given today’s price increase, perhaps that’s already included in the price.

Is Royal Bank of Canada a good investment?

Returning to Wall Street, analysts have a Moderate Buy consensus rating on TSE:RY stock based on five buys and two holds assigned over the last three months, as shown in the graphic below. With the company’s share price up 26.86% over the last year, TSE:RY’s average price target of C$147.86 per share implies a 0.09% upside potential.

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