Valued at $115.2 billion by market cap, The Charles Schwab Corporation (SCHW) is a leading financial services firm. Based in Westlake, Texas, the company offers extensive wealth management, brokerage, and banking services through its Investor Services and Advisor Services segments.
Companies valued at $10 billion or more are generally considered "large-cap" stocks, and Charles Schwab fits this criterion perfectly. Charles Schwab is renowned for its client-centric approach and its extensive support for nearly 15,000 independent Registered Investment Advisors (RIAs) and approximately 5.3 million workplace plan participants
However, the online stockbroker has slipped 18.5% from its 52-week high of $79.49, achieved in May. Shares of Charles Schwab dipped 10% over the past three months, lagging behind the broader Dow Jones Industrials Average's ($DOWI) 6.1% rise over the same time frame.
Longer term, SCHW is down 5.8% on a YTD basis, underperforming the DOWI's 8.6% gains. Moreover, shares of Charles Schwab have risen 7.1% over the past 52 weeks, compared to Dow Jones' 17.5% returns over the same time frame.
SCHW has shown a bearish trend, trading below its 50-day and 200-day moving average since mid-July.
Despite beating both Q2 top and bottom line forecasts, Charles Schwab’s stock dropped 10.2% on Jul. 16 due to concerns over the misleading pro forma earnings figure of $0.73 per share versus the GAAP earnings of $0.66 per share. Additionally, investors were unsettled by the company’s plan to shrink its banking business and hold more customer deposits off-balance sheet, potentially increasing future earnings volatility. Plus, on Aug. 22, the stock declined due to Toronto-Dominion Bank's sale of 40.5 million Schwab shares at a discount, which pressured Schwab’s stock price.
However, in contrast, its rival, AMTD IDEA Group (AMTD), has also seen a significant drop, with a 30.6% YTD decline and a 66.1% decrease over the past year, underperforming SCHW.
Despite the stock's underperformance over the past year, analysts are moderately bullish about its prospects. The stock has a consensus “Moderate Buy” rating overall from the 19 analysts covering the stock, and the mean price target of $73.72 represents a premium of 13.8% to current levels.
On the date of publication, Sohini Mondal 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.
