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Charles Schwab (SCHW)
NYSE:SCHW

Charles Schwab (SCHW) AI Stock Analysis

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Charles Schwab

(NYSE:SCHW)

Rating:78Outperform
Price Target:
$101.00
â–²(14.25%Upside)
Charles Schwab scores highly due to its strong earnings call performance and positive technical indicators. Despite challenges like high valuation and inconsistent revenue growth, the company's strategic initiatives and financial stability contribute to a strong overall outlook. The absence of any significant corporate events allows focus on these core strengths.
Positive Factors
Earnings
The company posted a 1Q25 EPS of USD1.04, surpassing the consensus estimate with outperformance stemming from exceptional net new assets and strong trading activity.
Growth Initiatives
Expect AI initiatives to solidify its leading position and support its long-term organic growth target and operational efficiency.
Negative Factors
Cash Flow
Total client cash fell $8.6B sequentially and as a % of client assets was 10.5%, just below 10.6% at the end March.
Stock Performance
Expect stock to be a modest underperformer today.

Charles Schwab (SCHW) vs. SPDR S&P 500 ETF (SPY)

Charles Schwab Business Overview & Revenue Model

Company DescriptionThe 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.
How the Company Makes MoneyCharles Schwab makes money primarily through three key revenue streams: asset management and administration fees, net interest revenue, and trading revenue. Asset management and administration fees are generated from the management of client assets in mutual funds, exchange-traded funds (ETFs), and other investment products. Net interest revenue comes from interest earned on client cash balances, loans, and securities lending, as well as from the company's own investment portfolio. Trading revenue is derived from commissions and fees on client trading activity, including equities, options, futures, and fixed income. The company has strategic partnerships with independent investment advisors and benefits from a strong brand reputation, which contributes to its ability to attract and retain a large client base.

Charles Schwab Earnings Call Summary

Earnings Call Date:Apr 17, 2025
(Q1-2025)
|
% Change Since: 17.15%|
Next Earnings Date:Jul 22, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance, significant growth in new assets and accounts, and robust client engagement. However, there were mentions of market volatility and ongoing efforts to manage supplemental funding. Overall, the positives significantly outweigh the negatives, indicating a strong position for the company.
Q1-2025 Updates
Positive Updates
Record Influx of Core New Assets
The firm saw $138 billion in core new assets, marking a 44% increase over the first quarter of last year.
Strong Financial Performance
Year-over-year revenue growth of 18% and a 41% year-over-year increase in adjusted earnings per share.
Impressive Growth in Client Engagement
Clients opened 1.2 million new accounts, an 8% increase over the prior year quarter, with daily average trades increasing by 24% to 7.4 million for the quarter.
Expansion of Wealth and Trading Solutions
Managed investing net flows increased 15% year-over-year, with nearly $500 billion in assets under management in holistic wealth solutions.
Continued Leadership in Brokerage Metrics
Schwab remains number one in total client assets, RIA custodial assets, and daily average trades among publicly reported peers.
Negative Updates
Volatile Market Conditions
The S&P 500 was down 5% and the VIX increased, dampening investor sentiment during the first quarter.
Challenges in Balancing Supplemental Funding
Supplemental funding at the banks is still being reduced, with $38 billion remaining, down from peak levels but still a focus for future reduction.
Company Guidance
In the first quarter of 2025, Schwab reported significant growth across multiple metrics as part of its "Through Clients' Eyes" strategy. The company saw a 44% year-over-year increase in core new assets, reaching $138 billion, alongside 1.2 million new account openings. Trading activity was robust, with daily average trades up 24% to 7.4 million, and assets under management in wealth solutions nearly hitting $500 billion. Schwab also experienced an 18% rise in revenue, totaling $5.6 billion, and a 41% increase in adjusted earnings per share compared to the previous year. The company maintained strong client satisfaction scores, particularly among legacy Ameritrade clients, and invested in expanding its branch network and hiring financial consultants. Schwab's strategic focus on growth and efficiency, alongside its diversification and capital management initiatives, has positioned it well for continued success, even amid market volatility.

Charles Schwab Financial Statement Overview

Summary
Charles Schwab's financial statements reflect a solid performance with strong profitability margins and efficient cash flow management, despite recent revenue declines. The company maintains a low leverage balance sheet, which provides financial flexibility. However, the decreasing trend in total assets and inconsistent revenue growth present challenges that need addressing to sustain long-term growth.
Income Statement
75
Positive
The income statement shows a stable revenue base with total revenue at $17.57B TTM, although it reflects a decline from the previous year. The gross profit margin is robust at 89%, and net profit margin is a healthy 36.9% TTM. However, revenue growth has been inconsistent, with a notable decline in the most recent period. EBIT and EBITDA margins are 33.8% and 45.9% respectively, indicating strong operational efficiency despite revenue declines.
Balance Sheet
70
Positive
The balance sheet indicates strong equity with a debt-to-equity ratio of 0.11 TTM, reflecting low leverage. Return on equity is high at 24.8% TTM, showcasing effective usage of equity. The equity ratio of 71.3% TTM suggests a healthy proportion of equity financing, though total assets have decreased significantly. Overall, the balance sheet shows financial stability with ample equity, albeit with reduced asset levels.
Cash Flow
80
Positive
Cash flow metrics are strong with an operating cash flow to net income ratio of 0.62 TTM, indicating healthy cash generation relative to profits. Free cash flow has grown significantly, contributing to a positive free cash flow to net income ratio of 0.54 TTM. This suggests effective cash management and capacity for reinvestment or debt reduction. Despite fluctuations in cash flows due to large investing and financing activities, free cash flow remains robust.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
26.20B26.00B18.84B20.76B18.52B11.69B
Gross Profit
20.41B19.61B18.84B20.76B18.52B11.69B
EBIT
8.35B7.69B6.38B9.39B7.71B4.30B
EBITDA
9.77B9.13B7.72B10.64B8.88B4.90B
Net Income Common Stockholders
6.49B5.94B5.07B7.18B5.86B3.30B
Balance SheetCash, Cash Equivalents and Short-Term Investments
90.77B124.70B149.25B188.07B453.03B377.75B
Total Assets
294.00B479.84B493.18B551.77B667.27B549.01B
Total Debt
7.43B45.13B59.08B37.88B23.77B13.63B
Net Debt
-21.91B3.05B15.74B-2.32B-39.21B-26.72B
Total Liabilities
272.26B431.47B452.22B515.16B611.01B492.95B
Stockholders Equity
21.75B48.38B40.96B36.61B56.26B56.06B
Cash FlowFree Cash Flow
9.79B2.05B18.89B1.09B1.20B6.22B
Operating Cash Flow
10.38B2.67B19.59B2.06B2.12B6.85B
Investing Cash Flow
36.43B35.43B57.41B32.05B-75.66B-125.85B
Financing Cash Flow
-42.50B-47.06B-61.24B-68.72B96.32B143.98B

Charles Schwab Technical Analysis

Technical Analysis Sentiment
Positive
Last Price88.40
Price Trends
50DMA
82.27
Positive
100DMA
80.70
Positive
200DMA
75.99
Positive
Market Momentum
MACD
1.42
Positive
RSI
64.38
Neutral
STOCH
71.46
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SCHW, the sentiment is Positive. The current price of 88.4 is above the 20-day moving average (MA) of 88.07, above the 50-day MA of 82.27, and above the 200-day MA of 75.99, indicating a bullish trend. The MACD of 1.42 indicates Positive momentum. The RSI at 64.38 is Neutral, neither overbought nor oversold. The STOCH value of 71.46 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SCHW.

Charles Schwab Risk Analysis

Charles Schwab disclosed 18 risk factors in its most recent earnings report. Charles Schwab reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Charles Schwab Peers Comparison

Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
81
Outperform
$86.65B28.3019.26%0.62%14.67%23.59%
80
Outperform
$30.33B26.2540.36%0.32%26.32%8.63%
78
Outperform
$160.38B26.8314.12%1.22%2.32%37.66%
RJRJF
77
Outperform
$29.63B14.1518.84%1.29%11.78%25.68%
GSGS
72
Outperform
$188.67B14.2712.26%1.95%7.70%68.64%
MSMS
71
Outperform
$211.48B15.4713.88%2.81%6.53%55.54%
64
Neutral
$12.85B9.817.79%78.20%12.23%-7.93%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
SCHW
Charles Schwab
88.40
15.86
21.86%
IBKR
Interactive Brokers
204.51
83.53
69.04%
LPLA
LPL Financial
377.08
99.26
35.73%
MS
Morgan Stanley
131.81
39.12
42.21%
RJF
Raymond James Financial
147.73
30.59
26.11%
GS
Goldman Sachs Group
624.17
184.69
42.02%

Charles Schwab Corporate Events

Executive/Board ChangesShareholder Meetings
Charles Schwab Elects Directors at Annual Meeting
Neutral
May 23, 2025

On May 22, 2025, Charles Schwab Corporation held its Annual Meeting of Stockholders where all director nominees were elected with more ‘for’ votes than ‘against’ votes. The meeting also saw the approval of Deloitte & Touche LLP as independent auditors for the 2025 fiscal year, the advisory vote on executive compensation, and a stockholder proposal for board declassification to elect directors annually.

The most recent analyst rating on (SCHW) stock is a Buy with a $82.00 price target. To see the full list of analyst forecasts on Charles Schwab stock, see the SCHW Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.