Download PDF

1. Company Snapshot

1.a. Company Description

The Charles Schwab Corporation, together with its subsidiaries, provides wealth management, securities brokerage, banking, asset management, custody, and financial advisory services.The company operates in two segments, Investor Services and Advisor Services.The Investor Services segment provides retail brokerage, investment advisory, banking and trust, retirement plan, and other corporate brokerage services; equity compensation plan sponsors full-service recordkeeping for stock plans, stock options, restricted stock, performance shares, and stock appreciation rights; and retail investor and mutual fund clearing services, as well as compliance solutions.


The Advisor Services segment offers custodial, trading, banking, and support services; and retirement business and corporate brokerage retirement services.This segment provides brokerage accounts with equity and fixed income, margin lending, options, and futures and forex trading; cash management capabilities comprising third-party certificates of deposit; third-party and proprietary mutual funds; plus mutual fund trading and clearing services; and exchange-traded funds (ETFs), including proprietary and third-party ETFs. It also offers advice solutions, such as managed portfolios of proprietary and third-party mutual funds and ETFs, separately managed accounts, customized personal advice for tailored portfolios, and specialized planning and portfolio management.In addition, this segment provides banking products and services, including checking and savings accounts, first lien residential real estate mortgage loans, home equity lines of credit, and pledged asset lines; and trust services comprising trust custody services, personal trust reporting services, and administrative trustee services.


As of December 31, 2021, the Company had approximately 400 domestic branch offices in 48 states and the District of Columbia, as well as locations in Puerto Rico, the United Kingdom, Hong Kong, and Singapore.The Charles Schwab Corporation was incorporated in 1971 and is headquartered in Westlake, Texas.

Show Full description

1.b. Last Insights on SCHW

The Charles Schwab Corporation's recent performance was driven by strong Q2 earnings, beating analyst estimates on both revenue and EPS, with revenue up nearly 25% and EPS up over 50%. Record client assets of $10.76 trillion and rising Net Interest Margin (NIM) fueled growth. The company's integration of TD Ameritrade is complete, shifting focus to fundamental growth. Analysts boosted forecasts after better-than-expected Q2 earnings, citing solid fundamentals, including high revenue growth and net income margin. A recent Schwab Trading Activity Index score of 43.69 indicates increased investor enthusiasm.

1.c. Company Highlights

2. Schwab's Q3 Earnings Shine with Record Revenue and EPS

Schwab delivered a stellar third quarter, with revenues surging 27% year-over-year to a record $6.1 billion, driven by strong client activity and robust net new assets. Adjusted earnings per share (EPS) came in at $1.31, a 70% year-over-year increase, beating analyst estimates of $1.25. The company's adjusted pretax margin expanded to 51.3%, reflecting effective cost management. As CFO Mike Verdeschi noted, "revenue increased 27% year-over-year, and adjusted pretax margins exceeded 51%." The impressive financial performance was fueled by a 27% rise in net revenues, driven by a significant increase in client accounts and assets under management.

Publication Date: Oct -25

📋 Highlights
  • New Accounts & Assets Surge: 1.1 million new brokerage accounts opened, with $138B in core NNA; YTD core NNA reached $356B.
  • Revenue & Earnings Growth: 27% YoY revenue growth to $6.1B, record adjusted EPS of $1.31 (70% YoY increase).
  • Client Assets & Market Leadership: $11.59T in client assets, #1 in retail trading (7M+ daily avg. trades) and RIA custodial assets.
  • Margin Balances & Capital Efficiency: Record $97.2B in margin balances; adjusted pretax margins exceeded 51%, $2.7B returned to shareholders via buybacks.
  • Crypto Expansion & Strategic Plans: Planning spot crypto launch in H1 2026; Ameritrade clients drove 30% of wealth flows, with satisfaction scores improving.

Business Momentum

Schwab's business momentum remains strong, with 1.1 million new brokerage accounts opened during the quarter, and $138 billion in core net new assets. The company's advisor business is thriving, with net new assets growth accelerating due to strong execution, integration with Ameritrade, and a compelling offering. The company is also seeing significant client engagement, with Ameritrade clients driving 30% of record wealth flows.

Margin and Cash Trends

Client margin loan balances reached a record $97.2 billion, while transactional sweep cash trends reflected normal client behavior. The company's client cash levels and margin loan balances indicate a healthy and engaged client base. The pledged asset line (PAL) balances grew to $23.4 billion, representing a 37% year-over-year increase.

Valuation and Outlook

Schwab's valuation metrics appear reasonable, with a Price-to-Tangible Book Value (P/TBV) ratio of around 4.22, and a Dividend Yield of 1.12%. For 2025, the company expects momentum to continue, with potential for a 2% lift in earnings relative to the upper end of the financial scenario range. Analysts estimate revenue growth of 9.1% for next year, indicating a positive outlook. The guidance for the rest of the year implies EPS growth of up to 2% or more, with a lift in revenue and expenses.

Growth Initiatives

The company is investing in growth initiatives, including the launch of spot crypto in the first half of next year, and exploring opportunities in tokenization. Schwab is open to offering clients the opportunity to hold securities on the blockchain and as tokens, seeing potential in certain asset classes, such as fixed income markets and private markets.

3. NewsRoom

Card image cap

SCHW or MKTX: Which Is the Better Value Stock Right Now?

Dec -02

Source: zacks.com

Card image cap

Is Charles Schwab (SCHW) Outperforming Other Finance Stocks This Year?

Dec -02

Source: zacks.com

Card image cap

3 Dirt Cheap Dividend Stocks to Buy and Hold

Dec -02

Source: fool.com

Card image cap

SCHW to Feel the Heat as Vanguard Greenlights Crypto-Product Trading?

Dec -02

Source: zacks.com

Card image cap

Arjuna Capital Cuts Stock Holdings in The Charles Schwab Corporation $SCHW

Dec -02

Source: defenseworld.net

Card image cap

Global Trading Surge: Can IBKR Outpace Schwab's Scale Advantage?

Nov -27

Source: zacks.com

Card image cap

The Charles Schwab Corporation: Rate Cuts Are Not A Problem (Upgrade)

Nov -27

Source: seekingalpha.com

Card image cap

Boston Partners Has $386.48 Million Position in The Charles Schwab Corporation $SCHW

Nov -26

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.69%)

6. Segments

Investor Services

Expected Growth: 10.5%

Growing demand for wealth management services, increasing adoption of digital platforms, and strategic partnerships will drive Charles Schwab's custody, trading, and brokerage services segment growth

Advisor Services

Expected Growth: 11.4%

Growing demand for independent investment advice, increasing adoption of digital trading platforms, and strategic partnerships drive growth for Charles Schwab's custodial, trading, and technology solutions.

7. Detailed Products

Brokerage Services

Charles Schwab offers brokerage services that enable individuals to buy and sell securities, options, and other investment products.

Trading Services

Schwab provides trading services that allow clients to trade securities, options, and futures online or through mobile apps.

Robo-Advisory Services

Schwab Intelligent Portfolios is a robo-advisory service that offers automated investment management and portfolio rebalancing.

Retirement Accounts

Schwab offers a range of retirement accounts, including IRAs, 401(k), and other employer-sponsored plans.

Banking Services

Schwab Bank offers high-yield checking and savings accounts, credit cards, and other banking products.

Wealth Management

Schwab Private Client and Schwab Advisor Network offer wealth management services, including financial planning and investment management.

Custodial Services

Schwab provides custodial services to independent investment advisors and financial institutions.

8. The Charles Schwab Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Charles Schwab Corporation is medium due to the presence of other online brokerages and financial institutions that offer similar services.

Bargaining Power Of Customers

The bargaining power of customers for Charles Schwab Corporation is low due to the company's strong brand reputation and the lack of switching costs for customers.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Charles Schwab Corporation is low due to the company's large scale and diversified supplier base.

Threat Of New Entrants

The threat of new entrants for Charles Schwab Corporation is high due to the low barriers to entry in the online brokerage industry and the increasing popularity of fintech companies.

Intensity Of Rivalry

The intensity of rivalry for Charles Schwab Corporation is high due to the highly competitive nature of the online brokerage industry and the presence of established players such as Fidelity and Vanguard.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 59.12%
Debt Cost 6.09%
Equity Weight 40.88%
Equity Cost 8.84%
WACC 7.21%
Leverage 144.60%

11. Quality Control: The Charles Schwab Corporation passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Morgan Stanley

A-Score: 6.3/10

Value: 5.0

Growth: 5.8

Quality: 5.8

Yield: 5.0

Momentum: 8.5

Volatility: 8.0

1-Year Total Return ->

View Full Report
Stock-Card
Schwab

A-Score: 6.2/10

Value: 4.4

Growth: 5.3

Quality: 8.1

Yield: 2.0

Momentum: 8.5

Volatility: 8.7

1-Year Total Return ->

View Full Report
Stock-Card
Raymond James Financial

A-Score: 6.1/10

Value: 4.2

Growth: 5.6

Quality: 8.1

Yield: 2.0

Momentum: 8.0

Volatility: 9.0

1-Year Total Return ->

View Full Report
Stock-Card
Goldman Sachs

A-Score: 6.0/10

Value: 5.2

Growth: 5.1

Quality: 4.9

Yield: 4.0

Momentum: 8.5

Volatility: 8.3

1-Year Total Return ->

View Full Report
Stock-Card
Brown & Brown

A-Score: 5.3/10

Value: 3.4

Growth: 7.4

Quality: 8.1

Yield: 1.0

Momentum: 3.0

Volatility: 9.0

1-Year Total Return ->

View Full Report
Stock-Card
First Citizens BancShares

A-Score: 4.9/10

Value: 6.1

Growth: 9.8

Quality: 4.9

Yield: 0.0

Momentum: 2.5

Volatility: 6.0

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

93.82$

Current Price

93.82$

Potential

-0.00%

Expected Cash-Flows