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Investing.com - Charles Schwab Corp. (NYSE:SCHW), a $175 billion market cap financial services giant, reported second-quarter earnings that exceeded analyst expectations, driven by stronger-than-anticipated net interest income and lower operating expenses. According to InvestingPro data, the company maintains a perfect Piotroski Score of 9, indicating exceptional financial strength.
The financial services company posted non-GAAP earnings per share of $1.14, surpassing Raymond (NSE:RYMD) James’ forecast of $1.12 and the consensus estimate of $1.10. Total (EPA:TTEF) revenues reached $5.851 billion, 1% above Raymond James’ model and 2% ahead of Wall Street expectations. The company’s impressive 97% gross profit margin and 10.9% year-over-year revenue growth demonstrate its operational efficiency.
Net interest income was the primary driver of the earnings beat, coming in $84 million better than Street estimates. Both improved net interest margin and higher average interest-earning asset balances contributed to the stronger net interest income performance.
Adjusted operating expenses of $2.920 billion finished 1% below analyst forecasts, primarily due to reduced employee compensation and benefits costs. The company’s performance was partially offset by higher preferred dividends and an increased tax rate, which each created a $0.01 drag on earnings per share.
Raymond James maintained its Outperform rating and $99.00 price target on Charles Schwab, noting that net new client assets, while seasonally slower, were generally in line with expectations, and total net new assets on a trailing twelve-month basis showed signs of continued acceleration. With 12 analysts recently revising earnings estimates upward, investors can access detailed analysis and more exclusive insights through the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Charles Schwab Corporation reported a record $35 billion in core net new assets for May 2025, marking a 13% increase from the previous year. The company also noted that total client assets reached $10.35 trillion, a 12% rise from May 2024. Raymond James raised its price target for Charles Schwab to $99, maintaining an Outperform rating, while Truist Securities increased their target to $100, citing solid fundamentals despite some moderation in growth metrics. Redburn-Atlantic upgraded Schwab’s stock from Sell to Neutral and raised the price target to $82, reflecting improved conditions in the U.S. retail wealth management market.
Charles Schwab’s stress capital buffer will remain at the 2.5% minimum following the Federal Reserve’s 2025 stress test, indicating a strong capital position. The company reported a Common Equity Tier 1 ratio of 32% as of March 31, 2025, significantly above the regulatory minimum. Trading activity remained robust, with daily average trades exceeding 7 million for the fifth consecutive month. Schwab’s ability to reduce high-cost funding and reinvest at higher yields has contributed to a positive outlook by analysts. However, Redburn-Atlantic expressed caution about the sustainability of the cash sorting recovery, noting potential risks in future earnings estimates.
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