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How Analysts View Charles Schwab after Q2 2018

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Jul. 23 2018, Updated 9:01 a.m. ET

Ratings on SCHW

After second-quarter earnings, Charles Schwab (SCHW) has “strong buy” ratings from seven analysts and a “sell” rating from one analyst. The stock has “hold” ratings from six analysts and “buy” ratings from five analysts.

In the second half of 2018, the performance of brokerages (VFH) will likely be dependent on rate hike decisions by the Federal Reserve, as interest rates affect the net interest margin of brokerages. The Fed is expected to announce two hikes in the remainder of the year mainly because of the strong labor market.

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Competitor analysis

Interactive Brokers Group’s (IBKR) second-quarter EPS fell short of analysts’ expectations. However, the company exceeded revenue estimates. E*TRADE Financial (ETFC) exceeded analysts’ EPS estimates in the second quarter with EPS of $0.95 compared to the expected $0.88. Charles Schwab has the highest amount of “strong buy” ratings compared to brokerage firms like TD Ameritrade Holding (AMTD), E*TRADE, and Interactive Brokers.

In the first half of 2018, Charles Schwab generated total net revenues of $4.8 billion, while during the corresponding period of 2017, net revenues were $4.2 billion. Charles Schwab’s one-year price target of $60.50 implies a rise of 14.4% from the price of $52.88.

E*TRADE has a one-year price target of $70.3, which represents an increase of 14.9% from the trading price of $61.21.

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