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Here's Why Schwab (SCHW) Stock is Worth Adding to Your Portfolio
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It seems to be a wise idea to add Charles Schwab (SCHW - Free Report) stock to your portfolio now, given the steepening of the yield curve and solid economic revival. The brokerage firm boasts solid fundamental and prospects. Further, the company is growing through opportunistic acquisitions.
Also, the stock has been witnessing upward earnings estimate revisions of late, reflecting analysts’ optimism regarding its earnings growth potential. The Zacks Consensus Estimate for its current-year earnings has been revised 2.1% upward over the past 30 days, while that for the next year has been raised 2.3%. It currently carries a Zacks Rank #2 (Buy).
Moreover, shares of the company have rallied 26% so far this year, outperforming the industry’s growth of 21.9%.
Here are few major factors that make Schwab stock worth betting on.
Earnings Growth: Schwab witnessed earnings growth of 22.8% in the past three to five years, higher than the industry average of 16.6%. The trend is expected to continue in the near term. The company’s earnings are projected to grow 19.6% for 2021 and 7.7% for 2022.
Opportunistic Acquisitions: Over the past year, Schwab has been on an acquisition spree. The buyouts of TD Ameritrade, USAA’s Investment Management Company, Wasmer, Schroeder & Company, LLC and the acquisition of Motif’s technology and intellectual property are likely to further strengthen the company’s position in the brokerage industry and help diversify revenues. Driven by strong liquidity position, Schwab is well poised to expand through inorganic initiatives.
Revenue Strength: Schwab’s revenues witnessed a compounded annual growth rate (CAGR) of 11.8% over the last five years (ended 2020). These were mainly driven by the company’s efforts to enhance trading revenues, rise in advice solution revenues and acquisitions.
Further, several initiatives including commission free-trading, reducing fees for the Schwab market cap-weighted index mutual funds and launch of Schwab Stock Slices are expected to continue contributing to the company's market share. The uptrend in revenues is expected to continue in the near term as reflected by projected sales growth rate of 45.4% for the current year and 2.6% for 2022.
Solid Balance Sheet: As of Dec 31, 2020, the company had cash and cash equivalents of $40.3 billion, and total debt of $13.6 billion. Further, its times interest earned and total debt/total capital ratios improved at 2020-end.
Steady Capital Deployments: Schwab remains focused on maintaining a low-cost capital structure, which has been able to support its capital deployments. In January 2020, the company announced a 6% increase in quarterly dividend, following a hike in 2019 and twice in 2018. Further, it has a share repurchase program in place. At the end of 2020, $1.8 billion shares were remaining under the buyback authorization.
Other Stocks Worth a Look
Cowen Group, Inc. witnessed an upward earnings estimate revision of 2% for 2021 over the past 30 days. Its shares have surged 39.1% so far this year. At present, it sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings estimates for Evercore Inc (EVR - Free Report) have moved 4.7% upward for 2021 over the past month. So far this year, the company’s shares have rallied 23.2%. At present, it carries a Zacks Rank of 1.
Moelis & Company (MC - Free Report) has recorded a marginal upward earnings estimate revision for 2021 in the past 30 days. This Zacks Rank #1 stock has rallied 17.5% year to date.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
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Here's Why Schwab (SCHW) Stock is Worth Adding to Your Portfolio
It seems to be a wise idea to add Charles Schwab (SCHW - Free Report) stock to your portfolio now, given the steepening of the yield curve and solid economic revival. The brokerage firm boasts solid fundamental and prospects. Further, the company is growing through opportunistic acquisitions.
Also, the stock has been witnessing upward earnings estimate revisions of late, reflecting analysts’ optimism regarding its earnings growth potential. The Zacks Consensus Estimate for its current-year earnings has been revised 2.1% upward over the past 30 days, while that for the next year has been raised 2.3%. It currently carries a Zacks Rank #2 (Buy).
Moreover, shares of the company have rallied 26% so far this year, outperforming the industry’s growth of 21.9%.
Here are few major factors that make Schwab stock worth betting on.
Earnings Growth: Schwab witnessed earnings growth of 22.8% in the past three to five years, higher than the industry average of 16.6%. The trend is expected to continue in the near term. The company’s earnings are projected to grow 19.6% for 2021 and 7.7% for 2022.
Opportunistic Acquisitions: Over the past year, Schwab has been on an acquisition spree. The buyouts of TD Ameritrade, USAA’s Investment Management Company, Wasmer, Schroeder & Company, LLC and the acquisition of Motif’s technology and intellectual property are likely to further strengthen the company’s position in the brokerage industry and help diversify revenues. Driven by strong liquidity position, Schwab is well poised to expand through inorganic initiatives.
Revenue Strength: Schwab’s revenues witnessed a compounded annual growth rate (CAGR) of 11.8% over the last five years (ended 2020). These were mainly driven by the company’s efforts to enhance trading revenues, rise in advice solution revenues and acquisitions.
Further, several initiatives including commission free-trading, reducing fees for the Schwab market cap-weighted index mutual funds and launch of Schwab Stock Slices are expected to continue contributing to the company's market share. The uptrend in revenues is expected to continue in the near term as reflected by projected sales growth rate of 45.4% for the current year and 2.6% for 2022.
Solid Balance Sheet: As of Dec 31, 2020, the company had cash and cash equivalents of $40.3 billion, and total debt of $13.6 billion. Further, its times interest earned and total debt/total capital ratios improved at 2020-end.
Steady Capital Deployments: Schwab remains focused on maintaining a low-cost capital structure, which has been able to support its capital deployments. In January 2020, the company announced a 6% increase in quarterly dividend, following a hike in 2019 and twice in 2018. Further, it has a share repurchase program in place. At the end of 2020, $1.8 billion shares were remaining under the buyback authorization.
Other Stocks Worth a Look
Cowen Group, Inc. witnessed an upward earnings estimate revision of 2% for 2021 over the past 30 days. Its shares have surged 39.1% so far this year. At present, it sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings estimates for Evercore Inc (EVR - Free Report) have moved 4.7% upward for 2021 over the past month. So far this year, the company’s shares have rallied 23.2%. At present, it carries a Zacks Rank of 1.
Moelis & Company (MC - Free Report) has recorded a marginal upward earnings estimate revision for 2021 in the past 30 days. This Zacks Rank #1 stock has rallied 17.5% year to date.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>