The Charles Schwab Corporation (SCHW) operates as a leading savings and loan holding company with an impressive market cap of $110.6 billion. Headquartered in Westlake, Texas, it provides a wide range of financial services, including wealth management, securities brokerage, banking, asset management, and financial advisory, both in the U.S. and internationally.
The prominent financial services company has struggled to keep pace with the broader market over the past year. SCHW stock has declined 5.7% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 15.1%. In 2024, SCHW stock dipped 9.6%, underperforming the SPX’s 9% increase on a YTD basis.
Narrowing the focus, SCHW’s underperformance is crystal clear in comparison to the SPDR S&P Capital Markets ETF (KCE). The exchange-traded fund has gained 21.9% over the past year, surpassing SCHW’s performance. Moreover, KCE’s 9% returns on a YTD basis outshines the stock’s high-single-digit loss over the same time frame.
Due to high interest rates, Charles Schwab has faced deposit outflows for years. Its Q2 earnings report heightened investor concerns, leading to a 19% drop in the stock in trading sessions following the release of its earnings report on Jul. 16. The company also missed new account opening targets in Q2, raising concerns about its ability to attract clients amid increasing competition from asset-light fintech firms.
For the current fiscal year, ending in December, analysts expect Charles Schwab to report an EPS decline of 1.9% year over year to $3.07 on a diluted basis. The company’s earnings surprise history is impressive. It beat or matched the consensus estimate in each of the last four quarters.
Among the 19 analysts covering SCHW stock, the consensus rating is a “Moderate Buy.” That’s based on nine “Strong Buy” ratings, two “Moderate Buy,” six “Holds,” one “Moderate Sell,” and one “Strong Sell.”
This configuration is slightly less bullish than a month ago when 11 analysts suggested a “Strong Buy.”
On July 28, Piper Sandler Companies (PIPR) analyst Patrick Moley downgraded his rating for SCHW to “Neutral” from “Overweight,” marking his first change in three years for the stock. He also lowered the price target to $64 from $80. Moley noted that while a less capital-intensive model could benefit Charles Schwab long-term, it introduces near-term uncertainty that may negatively impact shares for several quarters.
The mean price target of $73.72 represents an 18.5% premium to SCHW’s current price levels. The Street-high price target of $90 suggests an upside potential of 44.6%.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
