In 3Q15, Charles Schwab (SCHW) stock appreciated by 4% on higher client accounts, new assets, and increasing trades. The stock is trading at 33.5x on a price-to-earning basis, garnering a premium over its competitors.
Charles Schwab is expected to achieve strong EPS (earnings per share) growth of 30% in 2016. Its earnings per share are expected to be $0.25 in the fourth quarter of 2015 and $0.28 in 1Q16.
In 3Q15, Charles Schwab reported an increase in its net profits to $376 million, up by 7% as compared to 2Q15 and 17% as compared to 3Q14. In 9M15, the company reported a 6% increase in its net income to $1 billion. The company’s strategy to help its clients manage their wealth, rather than just provide brokerage services, has proved to be beneficial over the past few quarters.
Charles Schwab’s revenues stood at $1.6 billion, up by 3% in comparison to 3Q14. Its client assets increased by 1% to $2.42 trillion in 3Q15, and they declined in comparison to the previous quarter primarily due to valuation erosion of $117 billion.
Charles Schwab provides securities brokerage, wealth management, banking, money management, and financial advisory services. It offers services to its retail and institutional clients through two segments: Investor Services and Advisor Services.
The Investor Services division provides the following services:
- retail brokerage
- banking services
- retirement plan services
- corporate brokerage services
The Advisor Services division provides the following services:
- custodial, trading, and support services
- retirement business services
Here is how some of Charles Schwab’s peers in the brokerage industry fared with their respective quarterly earnings:
- Interactive Brokers Group (IBKR) beat estimates by 12%.
- TD Ameritrade (AMTD) met expectations.
- E*TRADE (ETFC) missed its estimates by 10%.
Together, these companies form 10.8% of the iShares US Broker-Dealers ETF (IAI).