On Tuesday, Charles Schwab Corp (NYSE:SCHW) stock received reaffirmation of its Buy rating and an $88.00 price target from Jefferies, following the financial services company's second quarter earnings report. The company posted an adjusted earnings per share (EPS) of $0.73, which aligned with consensus estimates and slightly exceeded Jefferies' own forecast of $0.71.
The reported revenues for the quarter fell marginally short of expectations by $14 million. However, this was more than compensated for by lower-than-anticipated expenses, which were $32 million below consensus, resulting in an adjusted operating income that surpassed expectations by $18 million.
Charles Schwab experienced a reduction in sweep cash by approximately $6.6 billion in June, a continuation of the trend observed throughout the second quarter of 2024. To counterbalance lower cash levels and support higher margin balances, which increased by $3.6 billion quarter over quarter, short-term funding was raised by $3.1 billion during the quarter.
The company also reported net new assets (NNA) of $33.2 billion in June, which represents an annualized growth rate of 4.4%. This figure highlights the company's ability to attract and retain client assets amidst market fluctuations. The consistency in growth metrics suggests a steady performance for Schwab in attracting new client investments.
InvestingPro Insights
Following the recent earnings report from Charles Schwab Corp, InvestingPro data indicates a market capitalization of $137.24 billion, with a Price/Earnings (P/E) ratio of 31.37, which is higher than the industry average, suggesting a premium valuation for the company. Additionally, the company's Price/Book ratio stands at 4.13 as of the last twelve months up to Q1 2024, which could signal that the stock is trading at a higher price relative to its book value. On the upside, Charles Schwab has shown a robust gross profit margin of 96.62% over the same period, reflecting its strong ability to control costs relative to revenue.
InvestingPro Tips highlight a mixed view on the company's financials. Analysts have revised their earnings downwards for the upcoming period, indicating potential headwinds. Despite this, Charles Schwab has a longstanding history of dividend reliability, having maintained payments for 36 consecutive years, which may appeal to income-focused investors. Furthermore, the company is expected to remain profitable this year and has been profitable over the last twelve months, reinforcing its financial stability. For investors looking for more in-depth analysis and additional tips, there are 6 more InvestingPro Tips available for Charles Schwab, which can be accessed at: https://www.investing.com/pro/SCHW. Don't forget to use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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