Royal Bank (RY) Expected to Beat Earnings Estimates: Can the Stock Move Higher?

Royal Bank (RY) is anticipated to report Q3 FY2025 earnings on August 27, with consensus expecting $2.36 EPS (-0.8% YoY) on $11.59 billion revenue (+8.5% YoY). Despite the slight EPS decline forecast, Zacks' analysis, leveraging a +1.06% Earnings ESP and a Zacks Rank #3, strongly suggests RY is poised to beat consensus EPS estimates. This, combined with a history of outperforming estimates in three of the last four quarters, positions RY as a compelling earnings-beat candidate that could see near-term stock appreciation.

Analysis

Royal Bank (RY) is positioned for a likely earnings beat in its upcoming report for the quarter ended July 2025, despite consensus estimates projecting a 0.8% year-over-year decline in earnings per share to $2.36. This outlook is supported by a robust 8.5% forecasted revenue growth to $11.59 billion and, more significantly, by forward-looking quantitative indicators. The consensus EPS estimate has been revised upward by 0.85% over the last 30 days, reflecting growing analyst optimism. This sentiment is captured by a positive Zacks Earnings ESP of +1.06%, indicating that the most recent analyst estimates are more bullish than the broader consensus. The combination of a positive ESP and a Zacks Rank #3 (Hold) suggests a statistically high probability of an earnings surprise, a pattern observed to be correct nearly 70% of the time according to the model's back-testing. While RY has beaten consensus EPS estimates in three of the last four quarters, a miss of 2.22% in the most recent quarter introduces a note of caution. In contrast, sector peer Bank of Nova Scotia (BNS) has a neutral 0% ESP, making it more difficult to predict a beat and highlighting RY's comparatively stronger position ahead of earnings.

Key Decisions for Investors

• Given the positive +1.06% Earnings ESP and recent upward estimate revisions, investors should anticipate a high probability of an earnings beat, which could act as a positive short-term catalyst for the stock.
• While indicators point to an earnings beat, the underlying forecast of a year-over-year EPS decline places significant importance on management's forward guidance during the earnings call, which will be critical for sustaining any potential stock appreciation.
• Investors should note the -2.22% earnings miss last quarter as a key risk factor, as a failure to outperform expectations this period could lead to a negative market reaction given the bullish setup.
• The contrasting outlook for peer Bank of Nova Scotia (BNS), which has a neutral ESP, may offer a relative value opportunity for investors looking to overweight RY within the Canadian banking sector ahead of the reporting season.