Charles Schwab
Performance
Despite sluggish trading activity across the brokerage industry, Schwab came away with a fruitful quarter. Higher asset management and interest revenue helped the company increase its net income by $33 million from the same quarter a year ago. Revenue rose 10% to $1.19 billion. Trading has slowed a bit, but that recent trend was offset by Schwab clients gravitating to higher-margin services like advisory solutions, along with more assets under management.
The table below gives you an idea of how Chuck scores from an investment standpoint when compared to its peers:
Company |
P/E |
P/B |
Dividend Yield |
Payout Ratio |
---|---|---|---|---|
Charles Schwab | 25.0 | 2.8 | 1.5% | 40% |
E*TRADE |
55.3 | 0.8 | 0.0% | NA |
TD AMERITRADE |
17.8 | 2.6 | 1.0% | 15% |
GFI Group |
32.8 | 1.2 | 4.3% | 321% |
Schwab's price-to-earnings ratio is better than those of E*TRADE and GFI Group. But TD AMERITRADE scores the cheapest multiple of the four.
Schwab also offers a better dividend yield than most of its peers. Although GFI's yield is the highest of the four, its payout ratio is also high, suggesting that the dividend may be unsustainable.
With its acquisition of optionsXpress
With strong fundamentals, stable returns, and impressive earnings, I continue to hold my optimistic view of the company.
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