Royal Bank earns about C$16 a share and trades near 17 times that. I expect 8% earnings growth and a slightly lower multiple, so the stock should roughly track the market plus its 4% dividend.
Key points
- C$15.87 trailing four-quarter diluted EPS (earnings per share); the stock is 17.2 times that.
- C$4.23 Q3 FY26 EPS, up 13% on a year earlier, led by wealth and capital markets.
- US$194.81 twelve-month target, 1.9% above the price, plus a dividend yield near 4%.
The call
The price asks for continued double-digit earnings growth. At US$191.22, or about C$273, the shares trade at 17.2 times trailing earnings. That is a full multiple for a bank, after a 31% gain over twelve months.
I expect growth to slow to about 8.5%. Management guides to mid-single-digit expense growth and a lower capital buffer, which allows buybacks. Personal Banking earnings are falling, and credit costs stay high. That supports a multiple near 15.6 times.
Diluted EPS per quarter (C$)Source: RBC filings via SEC XBRL and Q3 2026 report; Q4 FY26E is my estimate.
Valuation
| Item | Figure |
|---|
| FY26E EPS (my estimate) | C$16.41 |
| FY27E EPS, 8.5% growth | C$17.80 |
| Multiple on FY27E | 15.6 times |
| Value in Canadian dollars | C$277.76 |
| Target at 1.4258 CAD per US$ | $194.81 a share |
A bank with 18% return on equity and a falling capital buffer deserves a multiple near its own history, not above it. At 13.5 times the shares are worth $168.58; at 17.5 times, $218.53. That spread is roughly even around today's price. The total return of about 6% with dividends tracks the market, so Hold.
12-month value by price-to-earnings multiple (US$ a share)My arithmetic on FY27E EPS of C$17.80 at 1.4258 CAD per USD.
Risks
- Credit losses rise on trade or recession shocks; watch quarterly impaired-loan provisions, 35 basis points of loans in Q3.
- Capital-markets revenue fades after a strong year; watch investment-banking and trading revenue in the December report.
- The Canadian dollar strengthens or rates fall faster; a 1 point rate cut costs C$558 million of annual net interest income.
What would change my mind
Impaired provisions below 30 basis points with earnings growth above 12% would lift my target; a rise above 45 basis points would cut it.