Westlake, Texas-based The Charles Schwab Corporation (SCHW) operates as a savings and loan holding company. With a market cap of $126.2 billion, Charles Schwab provides various services including wealth management, securities brokerage, banking, asset management, custody, and financial advisory.
The capital markets giant has lagged behind the broader market over the past year. SCHW stock is up 3.1% on a YTD basis and 27.1% over the past 52 weeks underperforming the S&P 500 Index’s ($SPX) surge of 19.8% in 2024 and 31.1% over the past year.
Narrowing the focus, Charles Schwab has also lagged behind the SPDR S&P Capital Markets ETF’s (KCE) 28.4% gains in 2024 and 51% returns over the past year.
Although Charles Schwab has underperformed the broader market over the past year it has outpaced the market recently, gaining 9.6% over the past month. SCHW stock soared 6.1% after the release of its better-than-expected Q3 earnings on Oct. 15. The company reported a 26.8% year-over-year surge in total client assets, reaching a record $9.9 trillion. Charles Schwab reported a 5.2% year-over-year growth in total net revenues, reaching $4.8 billion, driven by the robust 20.6% growth in asset management and administration fees, totaling $1.5 billion.
However, its adjusted EPS remained steady at $0.77 the same as the year-ago quarter and its net interest revenue experienced a marginal drop of 67 basis points compared to the year-ago quarter to $2.2 billion.
For the fiscal year, ending in December, analysts expect Charles Schwab to report a marginal decline in adjusted EPS to $3.11. However, the company has a robust earnings surprise history. It has surpassed or matched analysts’ bottom-line estimates in each of the past four quarters. Its adjusted EPS of $0.77 for the last reported quarter surpassed the consensus estimates by 2.7%.
SCHW stock has a consensus “Moderate Buy” rating overall. Among the 21 analysts covering the stock, nine recommend “Strong Buy,” two advise “Moderate Buy,” eight suggest “Hold,” one advocates “Moderate Sell,” and one has a “Strong Sell” rating.
This configuration has been mostly stable over the past three months.
On Oct. 24, Morgan Stanley (MS) analyst Michael Cyprys maintained an “Equal-Weight” rating and raised the price to $74, implying a potential upside of 4.3% from current levels.
The mean price target of $76.30 represents a premium of 7.5% to current price levels. Meanwhile, the Street-high target of $90 suggests a potential upside of 26.8%.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
