Charles Schwab (SCHW) AI Stock Analysis

• Market Cap: $170.78B
• Dividend Yield: 1.13%
• Average Volume (3M): 9.62M
• Price to Earnings (P/E): 25.3
• Beta (1Y): 1.05
• Revenue Growth: 4.64%
• EPS Growth: 54.26%
• Country: US
• Employees: 32,100
• Sector: Financial
• Sector Strength: 70
• Industry: Financial - Capital Markets
• EPS (TTM): 1.14
• Shares Outstanding: 1,815,219,400
• 10 Day Avg. Volume: 8,507,811
• 30 Day Avg. Volume: 9,622,306
• PEG Ratio: 1.29
• Price to Book (P/B): 2.80
• Price to Sales (P/S): 5.20
• P/FCF Ratio: 66.00
• Enterprise Value/Market Cap: 0.89
• Enterprise Value/Revenue: 5.70
• Enterprise Value/Gross Profit: 7.03
• Enterprise Value/Ebitda: 14.07
• 1Y Price Target: $109.27
• Price Target Upside: 16.24% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 16

• Rating: 70 Outperform
• Price Target: $104.00 ▲(10.64% Upside)

Charles Schwab's overall stock score is driven by strong earnings call results and solid financial performance, despite challenges in revenue growth and market dependency. The technical analysis and valuation suggest a neutral to slightly cautious outlook, with the stock trading near its moving averages and a moderate P/E ratio. The company's strategic focus on innovation and client growth supports a positive long-term outlook.

Positive Factors

Revenue Growth

The significant revenue growth indicates strong market demand and effective business strategies, supporting long-term financial stability and expansion.

Client Growth

Robust client acquisition and asset growth enhance Schwab's market position and revenue base, ensuring sustained competitive advantage and business resilience.

Innovation and AI

Investment in AI and innovation boosts operational efficiency and client satisfaction, positioning Schwab for long-term success in a tech-driven financial landscape.

Negative Factors

Interest Rate Sensitivity

Interest rate sensitivity poses a risk to financial performance, as rate fluctuations can impact revenue streams and profitability, challenging long-term stability.

Market Dependency

Reliance on market conditions and trading volumes introduces volatility, potentially affecting revenue predictability and long-term financial health.

Revenue Decline

A decline in revenue growth rate indicates challenges in maintaining consistent revenue streams, which could impact long-term growth and market competitiveness.

Charles Schwab Business Overview & Revenue Model

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.

How the Company Makes Money

Charles Schwab generates revenue through several key streams. Primarily, the company earns money from commission fees on trades executed by its clients, although it has moved to a commission-free model for online trades of stocks and ETFs. A significant portion of its revenue comes from asset management fees charged on investment advisory accounts, which are based on the assets under management (AUM). Schwab also earns interest income from cash balances and margin lending, as well as through its banking services, including interest on loans and fees from deposit accounts. Moreover, Schwab earns income from its proprietary investment products and third-party mutual funds. The firm has established partnerships with various financial technology firms, enhancing its service offerings and attracting more clients, which contributes to its overall earnings.

Charles Schwab Financial Statement Overview

Summary

Charles Schwab shows strong profitability with healthy margins and a solid ROE. However, recent revenue declines and high reliance on liabilities present challenges. The company demonstrates effective management and operational efficiency but needs to focus on revenue growth and balance sheet strengthening.

Income Statement

The company's TTM (Trailing-Twelve-Months) gross profit margin stands at approximately 73.96%, indicating strong operational efficiency. However, the net profit margin is around 32.12%, showing healthy profitability but a decrease from previous years. The revenue growth rate from 2024 to TTM is negative, suggesting a decline in revenue generation. The EBIT margin is at 12.38%, and the EBITDA margin is at 52.06%, both indicating solid earnings before interest and taxes, though lower than past performance.

Balance Sheet

The debt-to-equity ratio is 0.74, suggesting a moderate level of leverage. Return on Equity (ROE) is calculated at 19.17% for TTM, reflecting strong profitability relative to equity. The equity ratio of 8.99% highlights a low proportion of equity in the total assets, indicating potential liquidity risks. The financial position is stable but relies significantly on liabilities.

Cash Flow

The free cash flow growth rate has significantly improved, showing strong cash generation capability. The operating cash flow to net income ratio is 1.14, suggesting efficient cash conversion. However, the free cash flow to net income ratio is 1.08, indicating a slight decrease in cash flow efficiency compared to net income. Overall, cash flow metrics are positive but show room for improvement.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	26.67B	26.00B	25.52B	22.31B	19.00B	11.69B
Gross Profit	21.63B	19.61B	18.84B	20.76B	18.52B	11.69B
EBITDA	10.81B	9.13B	7.72B	10.64B	8.88B	0.00
Net Income	7.28B	5.94B	5.07B	7.18B	5.86B	3.30B
Balance Sheet
Total Assets	458.94B	479.84B	493.18B	551.77B	667.27B	549.01B
Cash, Cash Equivalents and Short-Term Investments	99.58B	124.70B	149.25B	188.03B	453.03B	377.75B
Total Debt	37.67B	45.13B	59.08B	37.88B	23.77B	13.63B
Total Liabilities	409.49B	431.47B	452.22B	515.16B	611.01B	492.95B
Stockholders Equity	49.45B	48.38B	40.96B	36.61B	56.26B	56.06B
Cash Flow
Free Cash Flow	17.18B	2.05B	18.89B	1.09B	1.20B	6.22B
Operating Cash Flow	17.81B	2.67B	19.59B	2.06B	2.12B	6.85B
Investing Cash Flow	35.80B	35.43B	57.41B	32.05B	-75.66B	-125.85B
Financing Cash Flow	-45.15B	-47.06B	-61.24B	-68.72B	96.32B	143.98B

Charles Schwab Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 94.00
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: 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 94 is above the 20-day moving average (MA) of 93.63, below the 50-day MA of 95.29, and above the 200-day MA of 85.11, indicating a neutral trend. The MACD of -0.21 indicates Negative momentum. The RSI at 49.28 is Neutral, neither overbought nor oversold. The STOCH value of 33.81 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SCHW.

Charles Schwab Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
IBKR	78 Outperform	$31.33B	36.90	19.15%	0.71%	12.30%	20.76%
MS	76 Outperform	$251.57B	17.86	14.13%	2.39%	6.36%	45.50%
GS	76 Outperform	$239.14B	17.41	12.78%	1.63%	3.53%	45.85%
RJF	72 Outperform	$33.26B	16.37	18.16%	1.20%	9.42%	14.86%
SCHW	70 Outperform	$170.78B	25.33	15.59%	1.13%	4.64%	54.26%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
LPLA	65 Neutral	$25.18B	21.53	29.46%	0.38%	29.23%	13.45%