Why is Royal Bank of Canada stock rallying today?

Royal Bank of Canada shares surged 1.4% in early trading following the bank's impressive fiscal third-quarter 2026 results, released ahead of the market open. Adjusted net income climbed 10% year-over-year to $6.1 billion, with adjusted diluted EPS reaching $4.28, surpassing analyst consensus estimates by over CAD $4.04 per share.

Reported net income totaled $6.0 billion, marking an 11% increase from the previous year, and diluted EPS was $4.23, up 13% year-over-year. This strong performance was driven primarily by the Wealth Management, Capital Markets, and Commercial Banking divisions. Wealth Management alone saw a 32% year-over-year net income surge to $1,442 million.

The bank's CET1 capital ratio remained robust at 13.5%, comfortably exceeding regulatory minimums and indicating financial stability. Analyst sentiment played a supportive role, with Barclays raising its price target to C$300 from C$260 and National Bank reaffirming its Buy rating just days earlier. The overall market sentiment was also positive, with the S&P 500 up 0.5% and the NASDAQ soaring 1.1%, reflecting a risk-on environment that amplified the earnings reaction.

RBC's record profit, EPS beat, and strong divisional growth, coupled with a solid capital position, all contributed to today's pre-market rally, validating optimistic analyst expectations and alleviating investor concerns about whether valuations had become overvalued relative to fundamentals.