Charles Schwab Corp SCHW will be reporting its fourth-quarter earnings on Jan. 17. The Street expects Schwab to report 64 cents in EPS and $4.48 billion in revenue as it reports before market hours.
The company is one of the largest brokerage firms in the U.S., providing a wide range of investment services to individual investors. Its founder and chairman, Charles Schwab, pioneered discount sales of equity securities starting in 1975.
The company’s share price picked pace during the past three months of 2023. Schwab stock outpaced the broader S&P 500 index in the third quarter of 2023, signaling positive sentiment among investors.
Here's what analysts will be focusing on, and how the stock currently maps against Wall Street estimates.
Business & Fundamentals: Charles Schwab witnessed encouraging growth in client assets and brokerage accounts, showcasing its ability to attract and retain investors. In November 2023, total client assets reached an impressive $8.18 trillion, bolstered by $19.2 billion in net new assets and a substantial $508 billion in gains attributed to the stock market rally.
On the brokerage front, Charles Schwab hit a record-breaking 34.67 million active brokerage accounts in November, marking a significant milestone with 101,000 more accounts than the previous month.
However, not all aspects of Charles Schwab’s performance have been equally stellar. The company has grappled with challenges in its banking segment, experiencing a consistent decline in bank account deposits since June 2022. From $155.6 billion in June to $93.7 billion in November, the trend highlighted a noteworthy area of concern.
The Federal Reserve’s aggressive rate hike strategy has affected this decline. High-interest rates caused a shift in customer funds to higher-yield assets and impacted Schwab’s net interest revenue over the past year.
Despite these challenges, there is optimism that the tide may turn. As interest rates potentially ease in the coming months, there could be a reversal in the transaction cash activity. This should benefit Charles Schwab’s net interest revenue.
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Q4 Analysts' Focus: Charles Schwab showcased its ability to navigate market fluctuations, with robust performance in client assets and brokerage accounts. Analysts will be focused on assessing the company’s outlook concerning its banking segment. The Fed’a pivot to easing interest rate conditions in 2024 could help Charles Schwab face and alleviate the challenges it faced in its banking segment in 2023.
Ratings & Consensus Estimates: Analysts who reviewed the stock are divided on their outlook towards Schwab stock. The average consensus rating stands at a Buy with a price target of $68.28. However, recent reviews have assigned price targets ranging from $70 from Citigroup to $78 from Raymond James. TD Cowen and Goldman Sachs have a price targets of $77 and $71, respectively, on the stock.
SCHW Price Action: Schwab stop was trading down 1.38% $64.3 a share at the time of publication Tuesday.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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