Royal Bank (TSX:RY)(NYSE:RY) is the largest financial institution in Canada. Its shares have dropped 6.1% in 2020 as of late afternoon trading on July 31. However, the stock has climbed 10% over the past three months.
The bank released its second-quarter 2020 results on May 27. Net income plunged 54% from the prior year to $1.5 billion and diluted earnings per share fell 55% to $1.00. Meanwhile, Royal Bank boosted its provisions for credit losses to $2.83 billion. This was up from $2.40 billion in the prior year.
Investors can expect to see Royal Bank’s third-quarter 2020 results in late August. Banks have benefited from the economic reopening in several ways, but they are not out of the woods yet.
Employees will likely stay home to work through 2021 in order to combat the spread of COVID-19. Meanwhile, mortgage deferrals have started to drop across the country. Housing activity spiked in June, carrying some solid momentum into the summer season.
Shares of Royal Bank last had a price-to-earnings ratio of 11 and a price-to-book value of 1.6. This puts the stock in solid value territory relative to its industry peers. Royal Bank has maintained its quarterly dividend of $1.08 per share. This represents a 4.6% yield.
Bank stocks are a risk in an economy that is still reeling, but Royal Bank looks undervalued as we move into August.