What Analysts’ Ratings Suggest about Schwab’s Performance in 2017
As of March 2017, 17 out of the 20 analysts covering the stock, or 85%, have rated it as a “buy” or a “strong buy,” and three analysts have rated it as a “hold.”
Charles Schwab has seen consistent improvement in operating margins, backed by higher interest revenue, higher asset management revenue, new assets, and a rise in the broader market.
Charles Schwab’s (SCHW) stock has risen 8.8% in the past three months and 56.4% in the past year, backed by an expected strong performance in 2017.
The Federal Reserve raised interest rates by 0.25% in 4Q16 and is expected to raise them again in March 2017 in light of rising markets and lower unemployment.
Charles Schwab (SCHW) is expected to see higher trades in 1Q17, mainly due to higher volatility, rising equities, and interest rate tinkering by the Federal Reserve.
Charles Schwab’s (SCHW) Investor Services segment was managing $1.5 trillion, or 54% of Schwab’s total client assets, on December 31, 2016.
Through its Advisor Services segment, Charles Schwab (SCHW) is adding clients and assets in the areas of retirement and wealth management solutions.
Charles Schwab is expected to post earnings per share of $0.36 in 1Q17, reflecting a strong 24% rise year-over-year backed by higher trades and new client assets.
Charles Schwab’s (SCHW) stock has risen a record 30% during the past three months, backed by expected strong performance in 4Q16 with new assets, rising interest income, and higher advisory revenues.
Schwab’s margins have been positively affected by interest income, administration fees, increased trades, and expense management, partially offset by declining commissions.
Charles Schwab (SCHW) is expected to see subdued trades in 4Q16.
The Fed raised interest rates by 25 basis points in 4Q16 and is expected to raise them three times in 2017.
Charles Schwab’s (SCHW) Investor Services division offers brokerage, banking, services, and retirement products to corporates and individuals.
Through its advisor services segment, Charles Schwab (SCHW) is attracting clients seeking retirement and wealth management solutions.
Charles Schwab (SCHW) is expected to post earnings per share (or EPS) of $0.36 in 4Q16, a 50% increase on a year-over-year basis.
Brokerages (XLF) are expanding through mobile offerings in bids to compete with fintech (financial technology) companies foraying into the broking business.
Brokerages (XLF) have garnered premium valuations compared to other financial services companies and the broader market index. Why?
Brokerages (VFH) are carrying leverages in the range of 0.2x–1.25x depending upon their expansion plans, organic or inorganic routes, and interest rates.
In the first nine months of 2016, Charles Schwab (SCHW) added 55,000 new accounts to make a total of 1,088,000 accounts.
Brokerages are facing pricing pressures on the commissions front. However, they’re trying to maintain their margins via advisory-based offerings and expense management.