Charles Schwab (SCHW) Stock Climbs, Cuts Fees on ETFs
NEW YORK (TheStreet) -- Charles Schwab (SCHW) - Get Report stock is rising by 0.69% to $33.56 in afternoon trading on Wednesday, following yesterday's announcement that the company will reduce fees on some exchange-traded funds.
After BlackRock (BLK) said it would cut fees on seven of its ETFs, Charles Schwab followed suit and noted it will lower the expense ratio on its $4.9 billion Schwab U.S. Large-CAP ETF to 0.03%, Reuters reports. Schwab will also "look at" cutting the rate on its 0.04% U.S. Broad Market ETF.
ETFs with low fees are especially attractive, and providers compete to reduce their charges by seemingly minuscule amounts, according to the Wall Street Journal.
Though the fees might appear small, they total millions in revenue, Reuters adds.
"Our intention has always been to be the price leader in the ETF space, and we're going to maintain that," a Schwab spokesman told the Journal.
Separately, TheStreet Ratings team rates SCHWAB (CHARLES) CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
We rate SCHWAB (CHARLES) CORP (SCHW) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, growth in earnings per share, increase in net income and solid stock price performance. We feel its strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 6.3%. Since the same quarter one year prior, revenues slightly increased by 6.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- SCHWAB (CHARLES) CORP has improved earnings per share by 16.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, SCHWAB (CHARLES) CORP increased its bottom line by earning $0.96 versus $0.78 in the prior year. This year, the market expects an improvement in earnings ($0.99 versus $0.96).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 17.1% when compared to the same quarter one year prior, going from $321.00 million to $376.00 million.
- 40.90% is the gross profit margin for SCHWAB (CHARLES) CORP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 23.12% is above that of the industry average.
- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: SCHW
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.