On Monday, Charles Schwab Corp. (NYSE:SCHW) maintained its Outperform rating and an $84.00 price target from Wolfe Research stock following the release of its first-quarter 2024 results. The financial services company reported an operating earnings per share (EPS) of $0.74, slightly above the consensus and the firm's estimate of $0.73.
The slight outperformance was attributed to a stronger top line, with higher net interest income (NII) compensating for lower broker-dealer advisory (BDA) and trading fees. Additionally, adjusted expenses were slightly better than expected but were balanced out by a higher tax rate.
The detailed EPS variance was noted to be available on page 2 of the report. Wolfe Research highlighted that key performance indicators (KPIs) for March showed positive signs, such as an acceleration in net new assets (NNA), resilient sweep cash trends, and strong capital build. However, consensus expectations for March's sweep cash were high, anticipating flat balances despite some tax seasonality.
Despite the generally positive KPIs, Charles Schwab's shares were trading down approximately 2% in pre-market trading due to sweep cash declines that were worse than what analysts had expected.
Wolfe Research's stance remains unchanged, encouraging investors to maintain their Outperform rating on Charles Schwab. The firm suggests that investors might take advantage of any further weakness in the stock, given the underlying positive trends in the company's performance.
InvestingPro Insights
As investors weigh the Wolfe Research outlook on Charles Schwab Corp. (NYSE:SCHW), real-time metrics from InvestingPro offer additional context. The company's market capitalization stands at a robust $132.91 billion, reflecting its significant presence in the financial services sector. With an adjusted price-to-earnings (P/E) ratio over the last twelve months of 24.99, Charles Schwab trades at a premium compared to the industry average, which could be indicative of the market's confidence in its future earnings potential. Moreover, the company's revenue for the same period was $18.84 billion, despite a noted year-over-year decline.
An InvestingPro Tip highlights that Charles Schwab has maintained dividend payments for 36 consecutive years, which may appeal to income-focused investors, especially in the context of a 13.64% dividend growth over the last twelve months. Additionally, the company's six-month price total return of 42.2% signals strong recent performance in the stock market. These insights underscore the company's potential resilience and appeal to both growth and income investors.
For those seeking a deeper dive into Charles Schwab's financial health and future prospects, more InvestingPro Tips are available, including analysis on earnings revisions and short-term liquidity concerns. To explore these insights further, visit https://www.investing.com/pro/SCHW and consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 6 additional InvestingPro Tips available that could provide a more comprehensive understanding of Charles Schwab's investment potential.
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