NEW YORK (TheStreet) -- Shares of Charles Schwab Corp (SCHW) are gaining, up 1.19% to $31.57 in early market trading Wendesday, after analysts at Bank of America/Merrill Lynch upgraded the savings and loan holding company this morning.
The firm raised its rating to "buy" from "neutral", saying it sees significant upside from rising rates and margins.
Bank of America analysts also increased its price target to $36 from $34. They think Schwab has higher relative growth and less pressure from competition compared to its peers.
San Franciso-based Charles Schwab is engaged in securities brokerage, banking, money management, and financial advisory services.
The company provides financial services to individuals and institutional clients through two segments including investor services and advisor services.
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 and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 4.4%. Since the same quarter one year prior, revenues slightly increased by 3.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- SCHWAB (CHARLES) CORP's earnings per share declined by 8.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. 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 ($1.04 versus $0.96).
- 35.98% is the gross profit margin for SCHWAB (CHARLES) CORP which we consider to be strong. Regardless of SCHW's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 19.47% trails the industry average.
- 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 company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, SCHWAB (CHARLES) CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- You can view the full analysis from the report here: SCHW Ratings Report