On Tuesday, Charles Schwab Corp. (NYSE: NYSE:SCHW) received a vote of confidence from JMP Securities as their analyst boosted the firm's price target to $84, up from $82, while reiterating a Market Outperform rating. The raised price target follows Charles Schwab's third-quarter earnings report, which the analyst noted outpaced expectations with a solid performance.
The company reported earnings per share (EPS) of $0.77 for the third quarter of 2024, surpassing both the analyst's and the consensus estimate of $0.75. This performance was highlighted as a continuation of strong momentum from September, particularly in net new assets (NNA) and customer cash accumulation.
In their commentary, JMP Securities referenced the full quarter outlook provided by Schwab's management in September, which forecasted approximately 2-3% sequential revenue growth and a pre-tax profit margin of at least 40%. The actual results modestly exceeded these projections, with revenue growth of 3.3% and an adjusted pre-tax margin of 41.2%.
The revenue components broke down favorably when compared to JMP Securities' model. Asset Management & Administration Fees rose by 3.0%, Net Interest Revenue increased by 2.5%, and Other revenue jumped by 14.2%, which helped to compensate for lower Broker Dealer Affiliation (BDA) Fees and Trading Revenue, which fell by 6.2% and 4.0%, respectively.
In other recent news, Charles Schwab Corporation has experienced significant developments in its financial performance and executive leadership. The company's third-quarter earnings per share are expected to remain steady at $0.75, as reported by Jefferies and BofA Securities. Analysts' ratings have seen adjustments, with Jefferies maintaining a Buy rating but reducing the price target to $73.00, while BofA Securities maintains an Underperform rating and has reduced the price target to $63.
Deutsche Bank, Morgan Stanley, and Piper Sandler have also adjusted Schwab's stock targets, with Deutsche Bank maintaining a Buy rating. The company's CEO, Walt Bettinger, is set to retire at the end of 2024, with President Rick Wurster taking over in 2025.
Charles Schwab has announced a Fall Business Update for institutional investors, with a live public webcast featuring key executives. The company reported substantial growth in client assets, reaching $9.74 trillion, and 324 thousand new brokerage accounts opened in August.
InvestingPro Insights
Building on Charles Schwab's strong third-quarter performance, InvestingPro data reveals that the company's market capitalization stands at $132.1 billion, reflecting its significant presence in the financial services sector. The company's P/E ratio of 29.95 suggests that investors are willing to pay a premium for Schwab's shares, possibly due to its consistent profitability and growth prospects.
InvestingPro Tips highlight that Schwab has maintained dividend payments for 36 consecutive years, underlining its commitment to shareholder returns even in challenging market conditions. This aligns with the company's solid financial performance noted in the earnings report. Additionally, analysts predict that Schwab will remain profitable this year, which is consistent with the company's better-than-expected Q3 results and management's positive outlook.
It's worth noting that Schwab's revenue for the last twelve months was $18.4 billion, with a gross profit margin of 96.7%, indicating a highly efficient operation. This efficiency is reflected in the company's ability to exceed its pre-tax profit margin target as mentioned in the article.
For investors seeking more comprehensive analysis, InvestingPro offers additional tips and insights. Currently, there are 6 additional InvestingPro Tips available for Charles Schwab, providing a deeper understanding of the company's financial health and market position.
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