Zacks Investment Research lowered shares of Charles Schwab (NYSE:SCHW) from a buy rating to a hold rating in a research note released on Tuesday morning.
According to Zacks, “Schwab’s shares have outperformed the industry so far this year. The company has a positive record of earnings surprises in the recent quarters, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters. The company remains well positioned to gain from the rising rate environment and its initiatives to strengthen trading income. Also, the company’s enhanced capital deployment plans indicate a strong balance sheet position. However, continuous rise in expenses (due to rise in compensation costs) are likely to hurt bottom-line growth. Moreover, the company's significant dependence on fee-based revenue streams remains a major near-term concern as it might hamper financials.”
A number of other analysts have also weighed in on SCHW. Morgan Stanley set a $70.00 target price on shares of Charles Schwab and gave the stock a buy rating in a research note on Tuesday, September 18th. Wolfe Research started coverage on shares of Charles Schwab in a research note on Tuesday, September 25th. They set an underperform rating on the stock. Barclays cut their target price on shares of Charles Schwab from $65.00 to $57.00 and set an overweight rating on the stock in a research note on Monday, October 22nd. Credit Suisse Group cut their target price on shares of Charles Schwab from $56.00 to $53.00 and set an outperform rating on the stock in a research note on Friday, October 26th. Finally, Deutsche Bank upgraded shares of Charles Schwab from a hold rating to a buy rating and upped their target price for the stock from $52.00 to $54.00 in a research note on Tuesday, October 30th. One investment analyst has rated the stock with a sell rating, eight have assigned a hold rating and ten have given a buy rating to the stock. Charles Schwab presently has a consensus rating of Hold and an average target price of $56.94.
SCHW stock opened at $41.47 on Tuesday. The company has a debt-to-equity ratio of 0.32, a quick ratio of 0.29 and a current ratio of 0.29. Charles Schwab has a fifty-two week low of $41.13 and a fifty-two week high of $60.22. The company has a market cap of $57.53 billion, a P/E ratio of 25.29, a PEG ratio of 1.06 and a beta of 1.45.
Charles Schwab (NYSE:SCHW) last released its earnings results on Monday, October 15th. The financial services provider reported $0.65 earnings per share for the quarter, hitting the Zacks’ consensus estimate of $0.65. Charles Schwab had a net margin of 32.65% and a return on equity of 19.02%. The firm had revenue of $2.58 billion for the quarter, compared to analyst estimates of $2.58 billion. During the same period in the prior year, the firm earned $0.42 earnings per share. The business’s quarterly revenue was up 19.1% compared to the same quarter last year. Analysts anticipate that Charles Schwab will post 2.44 EPS for the current year.
The firm also recently declared a quarterly dividend, which was paid on Friday, November 23rd. Investors of record on Friday, November 9th were issued a $0.13 dividend. This represents a $0.52 dividend on an annualized basis and a yield of 1.25%. The ex-dividend date was Thursday, November 8th. Charles Schwab’s dividend payout ratio (DPR) is 31.71%.
Charles Schwab declared that its Board of Directors has initiated a share buyback plan on Thursday, October 25th that allows the company to repurchase $1.00 billion in shares. This repurchase authorization allows the financial services provider to repurchase up to 1.7% of its shares through open market purchases. Shares repurchase plans are typically a sign that the company’s leadership believes its stock is undervalued.
In related news, EVP Terri R. Kallsen sold 4,913 shares of the company’s stock in a transaction that occurred on Monday, December 3rd. The stock was sold at an average price of $46.09, for a total value of $226,440.17. The sale was disclosed in a filing with the Securities & Exchange Commission, which is available through the SEC website. Also, EVP Jonathan M. Craig sold 2,629 shares of the stock in a transaction that occurred on Monday, October 15th. The shares were sold at an average price of $48.84, for a total value of $128,400.36. The disclosure for this sale can be found here. Insiders sold 411,366 shares of company stock valued at $19,333,819 over the last ninety days. 11.50% of the stock is currently owned by corporate insiders.
Several hedge funds have recently bought and sold shares of the company. Vanguard Group Inc. lifted its holdings in shares of Charles Schwab by 0.9% during the third quarter. Vanguard Group Inc. now owns 88,586,138 shares of the financial services provider’s stock worth $4,354,008,000 after purchasing an additional 820,257 shares during the period. BlackRock Inc. lifted its holdings in shares of Charles Schwab by 2.6% during the third quarter. BlackRock Inc. now owns 86,976,839 shares of the financial services provider’s stock worth $4,274,909,000 after purchasing an additional 2,179,682 shares during the period. FMR LLC lifted its holdings in shares of Charles Schwab by 13.7% during the second quarter. FMR LLC now owns 65,193,384 shares of the financial services provider’s stock worth $3,331,382,000 after purchasing an additional 7,868,551 shares during the period. Edgewood Management LLC lifted its holdings in shares of Charles Schwab by 1.6% during the third quarter. Edgewood Management LLC now owns 21,966,947 shares of the financial services provider’s stock worth $1,079,675,000 after purchasing an additional 349,106 shares during the period. Finally, Bank of New York Mellon Corp lifted its holdings in shares of Charles Schwab by 0.9% during the third quarter. Bank of New York Mellon Corp now owns 12,675,853 shares of the financial services provider’s stock worth $623,016,000 after purchasing an additional 108,436 shares during the period. 79.51% of the stock is owned by institutional investors and hedge funds.
About Charles Schwab
The Charles Schwab Corporation, through its subsidiaries, provides wealth management, securities brokerage, banking, asset management, custody, and financial advisory services. The company operates through two segments, Investor Services and Advisor Services. The Investor Services segment provides retail brokerage and banking services, retirement plan services, and other corporate brokerage services; equity compensation plan sponsors full-service recordkeeping for stock plans, stock options, restricted stock, performance shares, and stock appreciation rights; and retail investor, retirement plan, and mutual fund clearing services.
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