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Sep 26, 2019

Are strong fundamentals for Schwab enough to break its downward trend?

As a company, financial services firm Charles Schwab Corp. (NYSE: SCHW) has performed extremely well in recent years. Unfortunately the stock has not performed as well as the company. If we break down the different analysis styles we see that Schwab’s fundamentals are really good and above average in almost every category, but the price performance or technical analysis shows that the stock has been below average.

Schwab has seen earnings grow by 34% per year over the last three years while sales have grown by 17% per year. Earnings grew by 10% in the most recent quarterly report and sales increased by 12%. Analysts expect earnings to grow by 9% for 2019 as a whole and sales are expected to increase by 5.8%.

The company’s management efficiency measurements are solid with a return on equity of 17.9% and a profit margin of 41.5%. The ROE is slightly above average and the profit margin is well above average.

The sales growth and the strong management efficiency measurements give the company a good SMR rating from Tickeron. The rating for Schwab is 15 and it indicates very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents.

As good as the fundamentals are, the Tickeron Valuation Rating of 59 indicates that the company is fair valued in the industry. A rating of 1 points to the most undervalued stocks, while a rating of 100 points to the most overvalued stocks. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization.

The Tickeron Profit vs. Risk Rating for Schwab is 62, indicating well-balanced risk and returns. The average Profit vs. Risk Rating for the industry is 73, placing this stock slightly better than average.

Where we run in to problems with Schwab is when it comes to the chart and the price performance. We see on the weekly chart that the stock has been trending lower since the second quarter of 2018. If we go back and connect the highs from July ’18 with the highs from September ’18, we get a downward sloped trend line that is in close proximity to the 52-week moving average. The stock just hit this trend line and has once again turned lower.

The Tickeron Price Growth Rating for Schwab is 78, indicating slightly worse than average price growth. The stock price has grown at a lower rate over the last 12 months as compared to S&P 500 index constituents. A rating of 1 points to highest price growth (largest percent return) while a rating of 100 points to lowest price growth (smallest percent return).

The Tickeron PE Growth Rating for Schwab is 75, pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents. A rating of 1 indicates highest PE growth while a rating of 100 indicates lowest PE growth.

Looking at the sentiment toward Schwab, we see analysts’ ratings that are slightly less optimistic than the average stock and a short interest ratio that indicates slightly more optimism than the average stock. There are 20 analysts covering the stock with 12 “buy” ratings, seven “hold” ratings, and one “sell” rating. This puts the buy percentage at 60% and that is just below the average range.

The short interest ratio is currently at 1.9 and that is below average and indicates there is less pessimism toward Schwab than toward the average stock. From a contrarian perspective, more pessimism would be a positive sign given the company’s fundamental strength. More bearish sentiment could also help the stock break the downward trend if there is a shift in the sentiment. Unfortunately I don’t think there is enough bearish sentiment to make a big difference for Schwab.

Related Ticker: SCHW

SCHW in upward trend: price may ascend as a result of having broken its lower Bollinger Band on April 12, 2024

SCHW may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options. In of 39 cases where SCHW's price broke its lower Bollinger Band, its price rose further in the following month. The odds of a continued upward trend are .

Price Prediction Chart

Technical Analysis (Indicators)

Bullish Trend Analysis

The Momentum Indicator moved above the 0 level on April 16, 2024. You may want to consider a long position or call options on SCHW as a result. In of 78 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .

The Moving Average Convergence Divergence (MACD) for SCHW just turned positive on April 22, 2024. Looking at past instances where SCHW's MACD turned positive, the stock continued to rise in of 43 cases over the following month. The odds of a continued upward trend are .

Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where SCHW advanced for three days, in of 296 cases, the price rose further within the following month. The odds of a continued upward trend are .

The Aroon Indicator entered an Uptrend today. In of 294 cases where SCHW Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .

Bearish Trend Analysis

The RSI Oscillator demonstrated that the stock has entered the overbought zone. This may point to a price pull-back soon.

The Stochastic Oscillator has been in the overbought zone for 2 days. Expect a price pull-back in the near future.

Following a 3-day decline, the stock is projected to fall further. Considering past instances where SCHW declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .

Fundamental Analysis (Ratings)

Fear & Greed

The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.

The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to outstanding earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.

The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating outstanding price growth. SCHW’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.

The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating well-balanced risk and returns. The average Profit vs. Risk Rating rating for the industry is 75, placing this stock slightly better than average.

The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (4.156) is normal, around the industry mean (5.433). P/E Ratio (28.492) is within average values for comparable stocks, (35.241). Projected Growth (PEG Ratio) (1.234) is also within normal values, averaging (2.610). Dividend Yield (0.014) settles around the average of (0.030) among similar stocks. P/S Ratio (7.032) is also within normal values, averaging (105.216).

Notable companies

The most notable companies in this group are Morgan Stanley (NYSE:MS), Goldman Sachs Group (NYSE:GS), Charles Schwab Corp (The) (NYSE:SCHW), CME Group (NASDAQ:CME).

Industry description

These banks specialize in underwriting (helping companies with debt financing or equity issuances), IPOs, facilitating mergers and other corporate reorganizations and acting as a broker or financial advisor for institutions. They might also trade securities on their own accounts. Investment banks potentially thrive on expanding its network of clients, since that could help them increase profits. Goldman Sachs, Morgan Stanley and CME Group Inc are some of the largest investment banking companies.

Market Cap

The average market capitalization across the Investment Banks/Brokers Industry is 10.53B. The market cap for tickers in the group ranges from 13 to 928.5B. PKRSF holds the highest valuation in this group at 928.5B. The lowest valued company is BFCH at 13.

High and low price notable news

The average weekly price growth across all stocks in the Investment Banks/Brokers Industry was 7%. For the same Industry, the average monthly price growth was 1%, and the average quarterly price growth was 119%. AGBA experienced the highest price growth at 499%, while BTCWF experienced the biggest fall at -29%.

Volume

The average weekly volume growth across all stocks in the Investment Banks/Brokers Industry was 137%. For the same stocks of the Industry, the average monthly volume growth was 111% and the average quarterly volume growth was 100%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 58
P/E Growth Rating: 64
Price Growth Rating: 57
SMR Rating: 71
Profit Risk Rating: 74
Seasonality Score: -12 (-100 ... +100)
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General Information

a provider of securities brokerage and other financial services

Industry InvestmentBanksBrokers

Profile
Fundamentals
Details
Industry
Investment Banks Or Brokers
Address
3000 Schwab Way
Phone
+1 817 859-5000
Employees
33000
Web
https://www.aboutschwab.com
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