Charles Schwab: Hold
On Monday, the company said August client assets jumped 12% year over year — but fell 2% from the prior month. The bottom line has been similarly herky-jerky. SCHW has missed Wall Street earnings estimates for two straight quarters after comfortably beating them for three in a row.
Perhaps the most attractive aspect of Schwab is that it has the wherewithal to grow its dividend. Too bad it still won’t be all that compelling. The forward yield stands at 1.1% vs. a five-year average of just 1.6%
Bottom Line: Rising interest rates will eventually help Schwab’s net interest margins, but earnings growth at this point is more about controlling costs than building client assets. SCHW is a “hold” at best.