Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a buy with a ratings score of B-. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and solid stock price performance. We feel these strengths outweigh the fact that the company shows low profit margins.
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Highlights from the ratings report include:
- SCHW's revenue growth has slightly outpaced the industry average of 4.7%. Since the same quarter one year prior, revenues slightly increased by 7.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Capital Markets industry average. The net income increased by 5.6% when compared to the same quarter one year prior, going from $195.00 million to $206.00 million.
- SCHWAB (CHARLES) CORP reported flat earnings per share in the most recent quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, SCHWAB (CHARLES) CORP reported lower earnings of $0.69 versus $0.71 in the prior year. This year, the market expects an improvement in earnings ($0.74 versus $0.69).
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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.
- The gross profit margin for SCHWAB (CHARLES) CORP is currently lower than what is desirable, coming in at 30.10%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 15.55% is above that of the industry average.
The Charles Schwab Corporation, through its subsidiaries, provides securities brokerage, banking, money management, and financial advisory services to individuals and institutional clients. The company operates through two segments, Investor Services and Institutional Services. Charles Schwab has a market cap of $21.4 billion and is part of the financial sector and financial services industry. The company has a P/E ratio of 24.00, above the S&P 500 P/E ratio of 18.00. Shares are up 16.5% year to date as of the close of trading on Friday.
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--Written by a member of TheStreet Ratings Staff.
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