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Charles Schwab’s Premium Valuations after 3Q17 Results

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Valuations after 3Q17 results

Charles Schwab (SCHW) has a PB (price-to-book) ratio of 3.20x on a next 12-month (or NTM) basis. Its competitors’ average PB ratio on an NTM basis is 1.13x, which reflects the premium valuations of SCHW. The PB ratios on an NTM basis for Morgan Stanley (MS), Bank of America (BAC), and Goldman Sachs (GS) are 1.19x, 1.04x, and 1.18x, respectively.

In 3Q17, Charles Schwab saw a 17.0% rise on a YoY (year-over-year) basis for its total client assets, which were $3.2 trillion. Of that total amount, its Investor Services division contributed $1.7 trillion, and its Advisor Services contributed $1.5 trillion. The company’s top management plans to maintain ample liquidity and capital with a focus on maintaining long-term growth. In 3Q17, the company’s total assets were $230.7 billion, reflecting a rise of 10.0% on a YoY basis.

Charles Schwab had a substantial rise of 72.0% on a YoY basis for its core net new assets, which came in at $51.6 billion. Of that total amount, its Advisor Services division contributed $28.2 billion, and Investor Services contributed $23.4 billion.

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Price-to-earnings ratio

Charles Schwab (SCHW) has a PE (price-to-earnings) ratio of 27.81x. Here are the PE ratios for its peers (XLF):

  • Interactive Brokers Group (IBKR): 46.02x
  • Goldman Sachs (GS): 12.39x
  • Morgan Stanley (MS): 14.07x
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