Price-to-earnings ratio

Charles Schwab’s (SCHW) price-to-earnings ratio stood at 19.74x on an NTM (next-12-month) basis. In comparison, the peer average is 19.47x. When Charles Schwab reported its second-quarter earnings, the stock rose. The stock prices of its competitors also witnessed upward movement, as Schwab’s strong results increased investor confidence in other major brokers.

How Charles Schwab Is Valued after Strong Second-Quarter Results

Charles Schwab’s competitors have the following price-to-earnings ratios on an NTM basis:

  • E*TRADE (ETFC): 15.81x
  • TD Ameritrade (AMTD): 15.17x
  • Interactive Brokers Group (IBKR): 27.43x

PE ratio on LTM basis

Technological investments, competitive commission rates, and acquisitions are expected to drive the brokerage industry moving forward. Analysts expect the earnings season to be strong, which could help equity markets. Improved markets could help investors regain confidence in equities.

In the second quarter, Charles Schwab mainly benefited from net interest income, which rose YoY as well as sequentially. During the same period, the company saw a YoY rise of 11% in its total expenses.

Charles Schwab’s price-to-earnings ratio on an LTM (last-12-month) basis stood at 29.30x. Other brokerage giants (VFH) have the following PE ratios on an LTM basis:

  • E*TRADE Financial (ETFC): 22.15x
  • TD Ameritrade Holding (AMTD): 33.75x
  • Interactive Brokers Group (IBKR): 16.84x

In the next article, we’ll look at analysts’ views on Charles Schwab and the company’s price target.

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