Charles Schwab (SCHW, $41.95) slashing 600 workers, to revive interest margins
Charles Schwab revealed plans to retrench 3% of its workforce, as it attempts to boost interest margins amidst macroeconomic headwinds.
The financial services giant is laying off 600 employees, hoping that the move would lower expenses and therefore mitigate pressure from declining interest rates and economic challenges. Impacted positions span all staffing grades, as well as organizations and locations across the company, as indicated by the company’s statement.
Charles Schwab’s banking unit has been experiencing pressure on its profit margins amidst a low-interest-rate environment. The global and domestic macroeconomic headwinds/uncertainties and therefore declining interest rates seem to have aggravated the narrowing of interest margin between loans and deposits for Charles Schwab. Furthermore, the Federal Reserve is expected to implement more rate cuts this year after dropping rates by a quarter of a percentage point over the summer – something that could potentially add to Charles Schwab’s concerns, since a large portion of its revenue comes from net interest.
In its second quarter earnings, Schwab’s net interest revenue declined -4% from the first quarter. In July, the company said that if the Fed rate cuts continued, it expected a further squeeze into the end of the year.
Through the job cuts, the company is hoping to achieve better control of expenses, and improvements on scale and efficiency — like platform improvements and digital experiences - according to the company.
Aroon Indicator for SCHW shows an upward move is likely
SCHW's Aroon Indicator triggered a bullish signal on April 18, 2024. Tickeron's A.I.dvisor detected that the AroonUp green line is above 70 while the AroonDown red line is below 30. When the up indicator moves above 70 and the down indicator remains below 30, it is a sign that the stock could be setting up for a bullish move. Traders may want to buy the stock or look to buy calls options. A.I.dvisor looked at 292 similar instances where the Aroon Indicator showed a similar pattern. In of the 292 cases, the stock moved higher in the days that followed. This puts the odds of a move higher at .
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 .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where SCHW advanced for three days, in of 293 cases, the price rose further within the following month. The odds of a continued upward trend are .
SCHW may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
Bearish Trend Analysis
The 10-day RSI Indicator for SCHW moved out of overbought territory on April 09, 2024. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 38 similar instances where the indicator moved out of overbought territory. In of the 38 cases, the stock moved lower in the following days. This puts the odds of a move lower at .
The Stochastic Oscillator entered the overbought zone. Expect a price pull-back in the foreseeable future.
The Moving Average Convergence Divergence Histogram (MACD) for SCHW turned negative on April 05, 2024. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 42 similar instances when the indicator turned negative. In of the 42 cases the stock turned lower in the days that followed. This puts the odds of success at .
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)
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 (5.403). P/E Ratio (28.492) is within average values for comparable stocks, (35.040). 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 (105.664).
Notable companies
Industry description
Market Cap
High and low price notable news
Volume
Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
General Information
a provider of securities brokerage and other financial services
Industry InvestmentBanksBrokers