What happened

In a bad month for the stock market, Charles Schwab (SCHW -0.05%) performed relatively well in September, returning 1.3%, according to S&P Global Market Intelligence. 

The financial services giant had been up as much as 5.6% at around $75 per share on Sept. 21, then fell back to close the month at $71.87 -- up 1.3%. Charles Schwab is currently trading at about $74 per share as of Oct. 7, down 11% year to date.

Schwab beat all the major benchmarks as the S&P 500 fell 9.3%, the Nasdaq Composite dropped 10.5%, and the Dow Jones Industrial Average plummeted 8.8% in September.

So what

Schwab has outperformed many of its competitors this year, mainly due to its diversified business model, which includes wealth management, securities brokerage, banking, asset management, custody, and financial advisory services, as well as its efficient management.

While revenue from trading and asset management was down in the most recent quarter, Schwab saw a 31% increase in net interest income from its banking business due largely to rising interest rates. Overall, Schwab saw revenue jump 13% year over year in the second quarter -- with about half of the gains coming from net interest income.

The stock price jumped on Sept. 15 when the company released its August activities report, which showed $43.3 billion in new net client assets, up 37% from July, and 332,000 new brokerage accounts, up 17% from the previous month. Also, Schwab maintained its third-quarter outlook, which calls for an 18% to 19% year-over-year revenue increase.

Several analysts, including Deutsche Bank, Jefferies, and UBS, responded to the report by raising Schwabʻs price target.

Now what

One of the analysts, David Fannon from Jefferies, raised his 2022 and 2023 earnings estimates for Schwab after further analysis of the TD Ameritrade acquisition, which has yet to be realized.

Schwab bought TD Ameritrade in 2020, but has not yet integrated the brokerage into its operations. That process is expected to start in the second half of 2022 and run into next year. Once it is fully integrated, Schwab should generate additional earnings from the efficiencies, expanded capabilities, and scale it produces. Fannon expects the revenue and cost synergies from the TD Ameritrade integration to start to accelerate in 2023, reported The Fly.

Schwab is expected to report third-quarter earnings on Oct. 17.