Free Trial

Is This Financial Stock a Bargain Buy After Recent Pullback?

Charles Schwab building

Key Points

  • Charles Schwab reported a 1 cent EPS beat on 0.7% YoY revenue growth for Q2 2024.
  • The CEO stated that 2024 is a transition year as it fortifies its financials and consolidates the last Ameritrade customers to Schwab.
  • The company is also halting its stock buyback program to pay down debt.
  • 5 stocks we like better than Charles Schwab.

Charles Schwab Today

The Charles Schwab Co. stock logo
SCHWSCHW 90-day performance
Charles Schwab
$74.31 +0.69 (+0.94%)
(As of 12/20/2024 05:45 PM ET)
52-Week Range
$59.67
$83.35
Dividend Yield
1.35%
P/E Ratio
29.03
Price Target
$80.50

Retail financial services firm Charles Schwab Co. NYSE: SCHW shares fell 17% in the days following its Q2 2024 earnings report. The company still beat EPS estimates and just barely eked out a YoY revenue gain. While underwhelming, the report wasn't a complete disaster, as one might assume based on the extent of the selling. The disappointment came from some of the steps the company is taking to fortify its balance sheet ahead of internet rate cuts and economic changes, including halting its stock buyback program. Schwab states that 2024 is a transition year, but value investors may find this an opportunity to jump into some shares at oversold levels.

Charles Schwab operates in the financial services sector, competing with fintechs like Robinhood Markets Inc. NASDAQ: HOOD, Sofi Technologies Inc. NASDAQ: SOFI, and online broker E-trade owned by Morgan Stanley NYSE: MS.

Charles Schwab: From Discount Broker to Zero-Commission

Charles Schwab was the original discount broker, offering cheaper stock trading commissions than its full-service counterparts. However, it no longer calls itself a discount broker since zero-commission trading, spearheaded by Robinhood, has taken over the industry. Schwab had no choice but to adopt zero-commission stock trades as the industry shifted.

Robinhood has been a thorn in Schwab's side as more retail investors and trades migrate to the frictionless mobile platform. To offset the migration, Schwab has bolstered other services, including more sophisticated stock and options trading platforms, banking, research, wealth management and retirement services, and customer support services. Schwab offers a more comprehensive overall platform for investors and traders, complete with around-the-clock 24/7 and 365 days a year human customer service.

Charles Schwab SCHW stock chart

SCHW Forms a Symmetrical Triangle Breakdown

The daily candlestick chart on SCHW illustrates a symmetrical triangle breakdown pattern. This pattern is comprised of a descending upper trendline and an ascending lower trendline meeting at an apex point. The stock will break out through the upper trendline or break down through the lower trendline. In this case, SCHW broke down through the lower trendline on a price gap following its Q2 2024 earnings. Shares sold off 17% as it attempts to find a floor. The daily relative strength index (RSI) sank into deep oversold territory at the 20-band. Pullback support levels are at $59.67, $56.97, $53.60, and $51.27.

Charles Schwab Modestly Beats Analyst Estimates for Q2 2024

Charles Schwab MarketRank™ Stock Analysis

Overall MarketRank™
85th Percentile
Analyst Rating
Hold
Upside/Downside
8.3% Upside
Short Interest Level
Healthy
Dividend Strength
Moderate
Environmental Score
-1.44
News Sentiment
0.61mentions of Charles Schwab in the last 14 days
Insider Trading
Selling Shares
Proj. Earnings Growth
24.36%
See Full Analysis

Schwab reported a Q2 2024 EPS of 73 cents, beating consensus analyst estimates by a penny. Revenues grew 0.7% YoY to $4.69 billion, beating $4.68 billion analyst estimates. Net interest margin expanded one basis point to 2.03% sequentially. Client transactional sweep cash balances ended June at $374.8 billion, reflecting customers' April tax disbursements, slowing client cash realignments, and continued net securities purchases by customers.

Total client assets in the quarter hit a record $9.41 trillion. Active brokerage accounts rose 4% YoY to 35.6 million. Core net new assets grew 17% YoY to $61.2 billion. Clients receiving ongoing advisory services rose 16% YoY. Net flow increases into Schwab Wealth Advisory and Wasmer Schroeder Strategies were 40% and 60%, respectively. Trading activity remained robust versus 2023 levels. YTD net buying of mutual and exchange-traded funds grew to the second-highest first half at $77 billion. Schwab was voted the #1 mobile app for customer experience by Corporate Insight for the second year in a row.

SCHW CEO Reminds Investors that 2024 is a Transition Year

Charles Schwab CEO Walt Bettinger reminded analysts that 2024 is a transition year. The company transitioned the last groups from the Ameritrade acquisition, which included $2 trillion in assets, 17 million clients, and over 3.5 million daily average trades. Former Ameritrade customers will move from negative to position asset flows net of new assets. Ameritrade customers will begin to utilize Schwab's capabilities in areas of financial planning, investment advisory and banking. Investment advisors that that formerly used Ameritrade for custodial services will bring net new assets to Schwab. It also expects Schwab Street Smart platform users to take advantage of the Thinkorswim platform.

Bettinger commented, “Halfway through the year, this definition of a transition year is being realized, again, as we anticipated. And all of these issues position us for a strong period of growth in client metrics and financial results in the coming years.”

Charles Schwab analyst ratings and price targets are at MarketBeat. The consensus price target among 15 analysts implies a 20.92% upside to $75.07.   

→ Your bank is lying to you. (From MyBankTracker) (Ad)

Should you invest $1,000 in Charles Schwab right now?

Before you consider Charles Schwab, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Charles Schwab wasn't on the list.

While Charles Schwab currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

Metaverse Stocks And Why You Can't Ignore Them Cover

Thinking about investing in Meta, Roblox, or Unity? Click the link to learn what streetwise investors need to know about the metaverse and public markets before making an investment.

Get This Free Report
Jea Yu
About The Author

Jea Yu

Contributing Author

Trading Strategies

Like this article? Share it with a colleague.

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Charles Schwab (SCHW)
4.2603 of 5 stars
$74.31+0.9%1.35%29.03Hold$80.50
Robinhood Markets (HOOD)
4.2929 of 5 stars
$38.33+3.8%N/A64.97Moderate Buy$39.20
SoFi Technologies (SOFI)
2.202 of 5 stars
$15.35+2.1%N/A153.52Hold$11.04
Morgan Stanley (MS)
4.7144 of 5 stars
$123.44+2.4%3.00%18.79Hold$121.80
Compare These Stocks  Add These Stocks to My Watchlist 


Featured Articles and Offers

Alphabet Gaining Momentum: Can It Reach $200 by December?

Alphabet Gaining Momentum: Can It Reach $200 by December?

Alphabet (GOOGL) is in the midst of a year-end rally, climbing 10% since September, and some analysts predict it could gain another 30% by Christmas!

Recent Videos

From Landfills to Profits: Opal Fuels CEO Shares How the Company Turns Trash into Cash
The Real Reason Tesla Stock Is Soaring – and Why Tech Expert Says It Won’t Stop
Best ETFs for 2025: Growth, Stability, and AI-Driven Investing

Stock Lists

All Stock Lists

Investing Tools

Calendars and Tools

Search Headlines