Charles Schwab (SCHW) earnings preview: record revenue growth

5:13 am ET, 13 Jul 2018

The Charles Schwab Corporation (SCHW)  is expected to report earnings on July 17 before market open.  Shares are trading at 50.47, down -1.25%.

What are SCHW earnings expectations?  What news will the market be watching out for?  

Charles Schwab reported record operating profits of $3.65 billion in 2017, and operating profits should rise significantly in the following years from the compound effect of revenue growth and operating margin expansion. 

Over the next five years, operating income will approximately double from the effect of higher interest rates, growth of the company’s bank, recent strong growth in client assets, and the effect of a lower corporate tax rate. Net interest income is highly profitable, with management aiming for a majority of interest-rate-related revenue to fall to the bottom line. This mix shift to more net interest income will expand operating margins. 

Schwab Intelligent Portfolios is an interesting opportunity for the company. Charles Schwab is one of the only companies that can make online advisory for the masses profitable, because of its scale-driven operational cost advantage, distribution platform, and proprietary products. Whatever developments occur in the retail brokerage and wealth management industry, Charles Schwab has the resources and capabilities to adapt to them.

Charles Schwab Corp. has a mixed history of beating analysts’ earnings estimates. In the past four quarters, the company: 

  • Delivered on the analyst EPS estimate ($.39 actuals vs. $.39 forecast) in FQ2’17;
  • Beat analyst EPS estimates by 1 cent ($.42 actuals vs. $.41 forecast) in FQ3’17;
  • Beat analyst EPS estimates by 3 cents ($.44 actuals vs. $.41 forecast) in FQ4’17;
  • Beat analyst EPS estimates by 1 cent ($.55 actuals vs. $.54 forecast) in FQ1’18.

For FQ2’18, EPS is expected to grow by 49% year-over-year to $.58, while revenue is expected to grow 17% year-over-year to $2.50 billion.

Over the last month, The Charles Schwab Corporation (SCHW) returned -12.09%.

The Charles Schwab Corporation (SCHW) average analyst price target ($60.91) is 20.69% above its current price ($50.47).

For the latest price and information on The Charles Schwab Corporation, please visit Finstead and search for "SCHW price" or "SCHW news".

The Charles Schwab Corporation (SCHW) Stock Guide

Updated at: 1:43 pm ET, 18 Sep 2020

Before we start: if you're looking for SCHW stock price, you can quickly find it out by visiting Finny and typing "SCHW quote". If you're looking for a quick scoop on SCHW stock (chart, price target, market cap, news and buy or sell analysis), go to Finny and look for "SCHW". You'll get all this info in one place. Or you can just type "SCHW news" to get the latest stock news.

Looking to buy or sell The Charles Schwab Corporation (SCHW)? Interested in getting the full scoop on SCHW, including earnings and dividends, stock forecast, buy or sell analysis and key stats? If so, you came to the right place.

In this SCHW stock guide, we'll address key questions about SCHW, above and beyond what you can find on Yahoo Finance, Zacks, MarketWatch or Morningstar.

Here is what you'll be able to find in this guide:

Earnings and Dividends: earnings, earnings date, dividend rate and dividend yield;
Analyst Predictions: stock forecast and analyst ratings;
Analysis: Finny Score and buy or sell analysis;
Key Stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio, industry, sector, and number of employees.

And here is the list of questions we'll answer:
1. What are SCHW earnings?
2. What is SCHW dividend?
3. What is SCHW dividend yield?
4. What is SCHW stock forecast (i.e., prediction)?
5. SCHW buy or sell? What is SCHW Finny Score?
6. What are the reasons to buy SCHW? Why should I buy SCHW stock?
7. What are the reasons to sell SCHW? Why should I sell SCHW stock?
8. What are SCHW key stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

So let's start. Scroll down to the question that interests you the most.

Earnings and Dividends

1. What are SCHW earnings?

SCHW trailing 12-month earnings per share (EPS) is $2.39.

2. What is SCHW dividend?

SCHW forward dividend is $0.72.

3. What is SCHW dividend yield?

SCHW forward dividend yield is 2.03%.

Analyst Predictions

4. What is SCHW stock forecast (i.e., prediction)?

Based on SCHW analyst price targets, SCHW stock forecast is $38.88 (for a year from now). That means the average analyst price target for SCHW stock is $38.88. The prediction is based on 19 analyst estimates.

The low price target for SCHW is $35.00, while the high price target is $47.00.

SCHW analyst rating is Buy.

Analysis

5. SCHW buy or sell? What is SCHW Finny Score?

#{finnyScore:50}Our quantitative analysis shows 4 reasons to buy and 4 reasons to sell SCHW, resulting in Finny Score of 50.

6. What are the reasons to buy SCHW? Why should I buy SCHW stock?

Here are the reasons to buy SCHW stock:

  • Charles Schwab's earnings should experience high growth in the next several years through the combined effect of higher interest rates and growth of the company's bank.
  • We believe its investment advice offerings are helping Schwab sow sticky relationships among clients.
  • Schwab's scalable model should enable it to pocket increasing revenue growth as earnings.
  • SCHW profitability is improving. The YoY profit margin change was 1.95 percentage points. See SCHW profitability chart.
  • SCHW forward dividend yield is 2.03%, higher than the industry (0.61%) and sector (1.11%) forward dividend yields. See SCHW forward dividend chart.
  • SCHW average analyst rating is Buy. See SCHW analyst rating chart.
  • SCHW cash to debt ratio is 6.61, higher than the average industry (0.18) and sector (0.18) cash to debt ratio. See SCHW cash to debt chart.

7. What are the reasons to sell SCHW? Why should I sell SCHW stock?

Let's look at the reasons to sell SCHW stock (i.e., the bear case):

  • While Schwab has the resources to adapt, financial technology innovation has increased in recent years and could disrupt parts of the investment services industry.
  • Pricing pressure always lurks as a danger to earnings in the online brokerage business.
  • Changes to the Federal Reserve's thinking regarding the future of rates underscore how unsettled the outlook for improved interest income remains, which may delay Schwab's improved profitability.
  • SCHW quarterly revenue growth was -8.60%, lower than the industry and sector average revenue growth (0.74% and 1.27%, respectively). See SCHW revenue growth chart.
  • SCHW Price/Sales ratio is 4.44, which is high compared to its industry peers’ P/S ratios. See SCHW forward Price/Sales ratio chart.
  • SCHW short share of float is 6.66%. The stock is much more frequently shorted than the average industry, sector or S&P 500 stock. See SCHW short share of float chart.
  • SCHW short interest (days to cover the shorts) ratio is 8.52. The stock garners more short interest than the average industry, sector or S&P 500 stock. See SCHW short interest ratio chart.

Key Stats

8. What are SCHW key stats : revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

Let's look at the key statistics for SCHW:

Metrics SCHW
Price $36.17
Average Price Target / Upside $38.88 / 7.49%
Average Analyst Rating Buy
Forward Dividend Yield 2.03%
Industry Capital Markets
Sector Financial Services
Number of Employees 19,500
Market Cap $46.13B
Forward P/E Ratio 19.04
Price/Book Ratio 4.44
Revenue (TTM) $10.38B
YoY Quarterly Revenue Growth -8.60%
Profit Margin 31.48%

If you liked this analysis, check out Stock Guides for other stocks.

Follow Us