Post by
TimeBuilder on May 27, 2022 12:39pm
FYI: Comments from Scotiabank re RY
10:26 AM EDT, 05/27/2022 (MT Newswires) -- Scotiabank said Royal Bank of Canada (TSX and NYSE: RY) exceeded its estimate for Q2 adjusted EPS but its revenue and expenses both missed forecasts.
Royal Bank of Canada reported adjusted EPS of $2.99 for the quarter ended April 30, 9% higher than Scotiabank's estimate of $2.74 and 12% more than the Street consensus of $2.67. This beat was primarily credit driven, Scotiabank said in a detailed review on the quarterly results.
Scotiabank said it views Royal Bank of Canada "much less favourably" given that the EPS beat was driven by provision on credit losses and taxes. Moreover, pre-tax, pre-provision earnings were down 2% year on year and missed its estimate by 3% driven by weaker-than-expected fee income including trading and underwriting.
"With a set up like that, one may have expected us to have gotten more negative on the stock, but looking ahead we continue to believe that Royal Bank is well positioned to outperform as rates continue to climb higher," Scotiabank said.
Scotiabank also noted the Royal Bank of Canada's peer-leading Common Equity Tier1 ratio is a positive in the current uncertain environment and provides the bank with plenty of firepower to continue to buy back shares and take advantage of lower valuations to make acquisitions.
Scotiabank increased its 2022 and 2023 core cash EPS estimates by 2% to $11.10 and $12.15, respectively. It values the shares at 11.7x its 2023 EPS estimates. It kept its price target unchanged at $147 and reiterated its Sector Outperform recommendation.
Price: 102.46, Change: +1.76, Percent Change: +1.75
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