Charles Schwab (SCHW, Financial) shares surged today by 6.87%, with the stock priced at $72.48. This significant movement was triggered by the company’s third-quarter earnings report, which exceeded market expectations.
The report highlighted a notable growth in total client assets, which reached $9.92 trillion. Active brokerage accounts also saw a year-over-year increase of 4%, totaling 36 million. This contributed to a 5% revenue boost, bringing it to $4.85 billion, surpassing the forecast of $4.78 billion. Although net interest revenue experienced a slight decline of 0.7% to $2.22 billion, the net interest margin improved to 2.08%. Additionally, asset management and administration fees rose by 21% to $1.48 billion.
Schwab (SCHW, Financial) successfully reduced its compensation expenses by 12.3% to $1.52 billion, attributed to earlier layoffs, which resulted in a robust pre-tax profit margin of 41.2%. The company’s adjusted earnings per share remained steady at $0.77, exceeding the expected $0.75. Furthermore, CEO Walt Bettinger announced the acquisition of $95.3 billion in net new core assets during the quarter.
Looking forward, Schwab (SCHW, Financial) projects a full-year revenue growth of 2% to 3% and expects a Q4 revenue increase of approximately 10%. The company anticipates its net interest margin to rise to around 2.2%, with earnings per share in the upper $0.80 range, compared to the consensus of $0.83.
In terms of stock analysis and valuation, Charles Schwab (SCHW, Financial) currently holds a market capitalization of $132.59 billion and a P/E ratio of 30.07, positioning it within the Capital Markets industry. The stock is considered “Fairly Valued” with a GF Value of $73.15. For more detailed information about the GF Value, refer to this GF Value page.
Despite facing some medium to severe warning signs such as insider selling and a revenue per share decline over the past 12 months, Schwab’s financial strength is underpinned by a Beneish M-Score indicating it is unlikely to be a manipulator. The stock exhibits a strong performance with a 52-week high price of $79.49 and considerable price appreciation, highlighted by a 43.57% increase over the past year.
