Shares of Royal Bank of Canada (TSX:RY) have generated some interest lately, climbing almost 14% over the past 3 months. Investors are keeping a close eye on the stock, especially as Canada’s banking sector faces changing economic conditions.
See our latest analysis for Royal Bank of Canada.
Royal Bank of Canada’s nearly 14% share price rally over the last three months stands out, especially when you look at the company’s impressive 12-month total shareholder return of 22.6% and build over a 170% gain across five years. The latest momentum suggests that investors are warming up to Canada’s biggest bank as confidence returns following last year’s sector volatility and with recent earnings showing the business remains resilient for the long haul.
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With shares on a strong run and the current price sitting near analysts’ targets, the key question now is whether Royal Bank of Canada is truly undervalued or if the recent gains mean the market has already priced in much of the growth ahead.
Royal Bank of Canada’s narrative fair value stands at CA$211.07, slightly above its last close of CA$205.27. This suggests only a modest gap between where analysts believe shares should trade and the current market price. This highlights a key moment for anyone watching this bank’s valuation story.
Ongoing successful expansion into the U.S. (particularly through City National and recruiter-driven growth in wealth management advisors), coupled with realized and expected cost synergies following the HSBC Canada acquisition, should diversify and stabilize RBC’s revenue base and improve operating leverage.
Want to decode the math behind this price target? The secret is in bold growth ambitions, expected margin evolution, and one pivotal valuation multiple that hints at big expectations. Discover what calculators can’t tell you about where this consensus fair value comes from.
Result: Fair Value of $211.07 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, persistent credit losses and uncertainties around the broader economic outlook could pose challenges to Royal Bank of Canada’s positive growth narrative going forward.
Find out about the key risks to this Royal Bank of Canada narrative.
While many see Royal Bank of Canada as undervalued, looking at its price-to-earnings ratio provides a more expensive perspective. Shares currently trade at 15.4 times earnings, which is higher than the North American Banks industry average of 11.3 and above its peer average of 13.7. It is also above the fair ratio of 14.1 that the market could move toward, suggesting investors may be paying a premium and that upward potential could be limited if sentiment shifts.
See what the numbers say about this price — find out in our valuation breakdown.
TSX:RY PE Ratio as at Oct 2025
If you have a different perspective or want to dig into the numbers on your own terms, it only takes a few minutes to craft your own view, so why not Do it your way
A great starting point for your Royal Bank of Canada research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include RY.TO.
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