"While leverage to rates remains a primary investor focus and driver of near-to-intermediate-term upside, we see the company's longer-term growth as investors increasingly price in higher rates into the valuation," analysts at Deutsche Bank said.
The longer-term growth is increasingly appealing that Charles Schwab is expected to receive nearly 30% total return, according to the analyst note.
Deutsche Bank raised the 2017 earnings to $2.10 per share from $2.05 per share, with 2018 earnings estimate of $2.70 per share from $2.63 per share.
Charles Schwab is a savings and loan holding company that is engaged in securities brokerage, banking, money management, and financial advisory services.
Shares of Charles Schwab are increasing 0.15% to $33.46 in early morning trading.
Separately, TheStreet Ratings team rates SCHWAB (CHARLES) CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate SCHWAB (CHARLES) CORP (SCHW) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and expanding profit margins. We feel its 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 5.7%. 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.
- Compared to its closing price of one year ago, SCHW's share price has jumped by 28.01%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- 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 ($1.05 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.
- Net operating cash flow has significantly decreased to -$1,305.00 million or 1991.30% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: SCHW Ratings Report