The Toronto-Dominion Bank (RY, NYSE) Q2 FY2026 earnings breakdown - conversational walkthrough with a price-aware verdict and Wall Street consensus comparison. Financials reported in Canadian dollars (CAD); share price and price targets in USD (NYSE), FX about 1.37 CAD per USD.
THE CALL: HOLD (3/5 conviction, MODERATE)
- CURRENT @ $113.58 (USD) -> HOLD
- BUY below $100.00 with $89.00 stop
- AVOID above $125.00
TRIGGER: Upgrade to BUY if OCC lifts or meaningfully relaxes the US retail asset cap
WINDOW: 12-24 months - OCC resolution unlocks meaningful US earnings upside
WALL STREET CONSENSUS
- Ratings: 0 Strong Buy / 9 Buy / 8 Hold / 0 Sell / 0 Strong Sell -> BUY
- Median 12-month price target: $116.00 USD (range $95 - $130)
THESIS
TD is Canada's second-largest bank with strong CET1 capital and a recovering earnings trajectory. US Retail is under an OCC asset cap from the 2024 AML action — the dominant overhang.
Bull lever: OCC cap resolution unlocks US Retail earnings and loan book growth, likely triggering a re-rating toward peers. Canadian franchise is solid; NII growing; CET1 at 13.4% supports buybacks.
Key risk: The OCC cap has no committed lift date. AML remediation is multi-year; new compliance missteps reset the clock. The stock is already up 65% from lows — most easy money made without cap being lifted.
QUALITY CHECK
- Management quality grade: B+
- Earnings quality grade: B
KEY METRICS - Q2 FY2026 (CAD unless noted)
- Diluted EPS: C$2.43 (+-61.0% YoY; a clean beat)
- Net income: C$5.51B (+25% YoY)
- Total revenue: C$27.02B (+-5.1% YoY)
- Return on equity: 17.2% (up from 14.2% a year ago)
- CET1 capital ratio: 13.5% (well above the 11.5% regulatory floor)
- Provisions for credit losses (PCL): C$912M (down 36% YoY)
- Efficiency ratio: ~52%
- Dividend raised 14% YoY plus a new buyback of up to 45 million shares
- Dividend yield: ~2.5% (USD); stock up ~46% over the trailing year
DISCLAIMER
This is for informational and educational purposes only. Not financial advice. Charged Alpha does not have a position in RY.
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