The Charles Schwab Corporation ($SCHW) Earnings (Q3 FY22)

 The Charles Schwab Corporation ($SCHW) Earnings and Opinion:


Charles Schwab is a company in the Financial Services sector and operates in the Capital Markets industry. The company provides wealth management, securities brokerage, banking, asset management, custody, and financial advisory services. Charles Schwab was incorporated in 1971 and is currently headquartered in Westlake, Texas. The company made its debut on the public market in 1987.

Charles Schwab Financial Results:

  • Net revenue of $5.5B beating expectations of $5.41B
  • Net Interest Income of $2.926B beating expectations of $2.846B
  • Net Interest Margin of 1.97% beating expectations of 1.86%
  • Trading Revenues of $930M beating expectations of $864.77M
  • Adj Diluted EPS of $1.10 beating expectations of $1.05
Opinion:
Charles Schwab has been volatile in todays trading session. The company started the day trading higher, but has since fallen into the losses (losing about 4%). The company reported earnings for Q3 before the markets opened this morning. The company posted record on both EPS and revenues, both significantly higher than last years Q3 results. Schwab saw Net Interest Revenue rise 44% on YOY basis to $2.9B. All of this is being overlooked though. Investors have looked past the record earnings report and focused in on one key metric they were not too pleased with. Cash sorting is something that has thrown the stock lower today. Investors were not too happy with the numbers that came out on the balance sheet and have changed the course for Schwab's stock price in todays trading session. I feel like this is a little extraneous, you have to value the fact that the company reported the best financials in the history of the company. Compared to last year, the company is in a much better position, and they are looking to build on it. It seems as if the Financials industry has taken a solid approach of these tough times in the economy. Most, if not all, of these type of companies are thriving on net interest revenue and margins. This seems to be a popular metric in this quarter. Charles Schwab did a solid job on this metric, which should overlook the cash sorting on the balance sheet. Anyways, as far as valuation goes, Charles Schwab is valued higher than peers. The ROE sits at 12.11%, which is lower than its competitors. The PEG ratio is at 0.89, which is lower than the median of 1.13. The 5 year CAGR for EPS is at 18.06, which is lower than peers average of 24.17. In my opinion, I think now could be a good opportunity to scoop up this stock. I am not a big fan of the capital markets industry. I lean more towards banks when I look to invest in Financials. I feel as if the capital markets companies want to get as much money from you as possible when it comes to Fees. However, the banks will reward you for keeping your money with them. Also, it seems as banks are more established and have better Investment management. I do think we have upside in Charles Schwab, but it will be limited to how much they can top these earnings in the future. I have no definitive position on this one, but I think you could generate some sort of return on owning Charles Schwab. 


*Information from Bloomberg and Yahoo Finance

Comments

Post a Comment

Popular posts from this blog

Weekly Earnings Review: September 25, 2023- September 29, 2023

     It was a nice little break in the earnings report, but just like that we are back! We are slowly easing our way back into earnings season. However, this week marked the end of Q3 and September. September was a downturn from the rally we saw earlier in the year. There is a lot of stuff looming as the government is set to shut down on October 1st. The Fed is keeping a close eye on inflation but this weeks prints showed some signs of improvement. The average consumer is struggling as savings keep dwindling. In terms of our earnings, we just had two companies that reported this week. One is a warehouse style retailer and the other is a wide range consulting firm.  Tuesday, September 26, 2023 Costco Wholesale Corporation (COST)-     Costco beat expectations on both the top and bottom line. The stock saw a decline after the initial earnings report, but by the end of the week it has hit a new 52-week high. The revenue growth was impressive as it grew by a hair under 10%. The COGS growth
Read more

Weekly Earnings Review: October 16, 2023- October 20, 2023

      Well earnings season is finally among us, so we will start producing more beefier blog posts and cover a lot more companies over these next few weeks. I had one company report last week that I decided to throw into this weeks post, because I felt that it was pointless to make a post with just one boring company. With the inclusion of that company, we will cover 7 companies that report earnings this week and will give your our thoughts and opinions on how they performed during the quarter and the outlook. There is a lot of controversy going on with a war breaking out in Israel and the House of Representatives with out a speaker. This year seems to be the year of how geopolitics affect the market. There seems to be a lot of confusion with the outlook of the market right now, but inflation numbers still look to be fair and the earnings of major companies will be able to tell us a little bit more about where this is headed.  Thursday, October 12, 2023 Walgreens Boots Alliance (WBA)-
Read more

Weekly Earnings Review: November 27, 2023- December 1, 2023

Image
     Stocks continue to rise as we enter the final month of trading for the year. The S&P 500 and Nasdaq had another stellar month. Bond yields continue to fall, as interest rates have seemed to reach their peak. Estimates are all over the place when it comes to when cutting will start and how many cuts we will see next year. I added a new mantra to particular companies. I want to add some visual pieces to the post to entice the readers. Hope you guys enjoy the visuals and the excerpts. Stay investing! Monday, November 27, 2023 Zscaler (ZS)-      Zscaler continues to carry its momentum, as the company beat on both the top and bottom lines. The company achieved 40% growth on the top line and saw impressive growth on the bottom line as well. Management raised guidance and are expecting around 30% growth on both the top and bottom line. What is so impressive about this company is that they are achieving high growth and high profitability. This is a feat that a lot of software companie
Read more