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Summary
- Royal Bank of Canada and TD Bank are all set to release their first quarter earnings for the fiscal 2021 this week.
- Investors are expecting buyback and dividend hike announcements.
- Bay Street analysts are anticipating a decline in banks’ respective toplines due to accumulated bad loans and COVID-19 impact.
- Stocks of both banks are up to their 52-week highs and could rise further post COVID-19 inoculations drive.
Royal Bank of Canada (TSX:RY) and Toronto Dominion Bank (TSX:TD) are buzzing in stock markets on Tuesday as investors await the first fiscal quarter earnings of the two giant lenders in the next two days.
Stocks of Canadian banks have started rebounding since the big six lenders’ last quarter results.
Investors have keenly been watching banks’ earnings this week, which kicked off today with the quarterly reports of Bank of Montreal (BMO) & Scotiabank (BNS).
The financial sector is still in recovery mode and their earnings might decline on a year-over-year (YoY) basis as banks continue to create provisions for bad loans amid the ongoing pandemic to offset potential debts. Hence, it would not be ideal to evaluate the banks’ financial health with topline figures this earnings season.
Earnings of the big six banks may propel a mini rally on the stock markets. Long-term investors can also expect dividend hikes from these blue-chip stocks.
Here’s a glance at performances of RY and TD stocks:
Stocks of Royal Bank of Canada (TSX:RY) are up almost 7 per cent in one year, with a current market cap of C$ 159.11 billion. The stock today soared to its 52-week high of C$ 111.94 per common share*. The bank is scheduled to release its earnings on Wednesday.
Shares of Toronto Dominion Bank (TSX:TD) are also currently trading at a 52-week high of C$ 77.36*. It has returned as much as 6.5 per cent in one year, with a market of C$ 139.6 billion. The bank is scheduled to release its earnings on Thursday.
Image Source: Kalkine Group @2020
Market Sentiment & COVID-19 Impact
There are a few catalysts on investors’ minds such as the COVID-19 inoculations across North America and an economic rebound from the pandemic-slump. Financial firms are also following the above two factors, which may help them operating robustly this year.
Bay Street analysts are weighing closely on how these banks utilize the excess amount they hold. Any buyback decision or higher quarterly dividend report can drive up the share prices. Both stocks have been rebounding steadily this year.
Please note, the above constitutes a preliminary view and any interest in stocks should be evaluated further from investment point of view.
*Details recorded at 10:40 am ET on February 23
