Royal Bank of Canada (TSX:RY)(NYSE:RY) releases its third quarter earnings on Wednesday morning and it might be a good opportunity to buy the stock before the financials come out.
Bank stocks have had a tough year so far and the RBC has been no exception with its stock price dropping over 7% in the past six months. A good earnings result can certainly push the share price up in a hurry but a bad quarter can certainly send it in the opposite direction.
In its last quarter the bank showed a strong profit growth over 9% from the prior year. The trouble with earnings is even if a company reports a strong result sometimes a small but important detail like a reduction in the outlook for the year could negate the overall improvement in earnings.
However, generally banks are a sound investment for the long-term so it’s hard to go wrong with buying the stock, especially since it has had such a considerable fall in the past half-year. The share price has been stuck in a range from around $91-$95 since May, so it may take a significant earnings result to move the stock outside of those limits.
The stock is an attractive buy if only because the last time the stock was under $90 was in December, and since then interest rates have gone up and are expected to go up yet again. For those reasons I don’t think you can go wrong buying in at this price, regardless of the effect earnings will have.
