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4 Reasons to Add Schwab (SCHW) Stock to Your Portfolio Now
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Charles Schwab (SCHW - Free Report) stock looks like a promising investment option now. The company’s solid fundamentals and good growth prospects are encouraging. Supported by a robust balance sheet and liquidity position, Schwab has been expanding through opportunistic acquisitions, which will likely keep supporting the top line.
The Zacks Consensus Estimate for the company’s 2021 earnings has been revised marginally upward over the past 60 days. Also, the consensus estimate for next year’s earnings has witnessed an upward revision of 2.4%. This shows that analysts are optimistic regarding the company’s earnings growth prospects. Thus, Schwab currently carries a Zacks Rank #2 (Buy).
Over the past year, shares of the company have rallied 63.3%, outperforming the industry’s growth of 38.5%.
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Mentioned below are a few other factors that make Schwab stock worth betting on right now:
Earnings Growth: Schwab has witnessed earnings growth of 17.2% in the past three to five years. The uptrend is expected to continue in the near term. For 2021 and 2022, the company’s earnings are projected to grow 31.8% and 16.9%, respectively.
Also, its long-term (three-five years) expected earnings growth rate of 22.7% promises rewards for investors.
Inorganic Expansion Efforts: Since last 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 strengthen SCHW’s position in the brokerage industry and help diversify revenues. Driven by a strong liquidity position, Schwab remains well-poised to expand through inorganic efforts.
Revenue Strength: Schwab’s revenues witnessed a compounded annual growth rate (CAGR) of 11.8% over the last five years (2016-2020). Revenue growth has mainly been driven by the company’s efforts to enhance trading revenues, the rise in advice solution revenues and its inorganic growth efforts.
Further, several initiatives, including commission-free trading, reducing fees for the Schwab market cap-weighted index mutual funds and the launch of Schwab Stock Slices, are expected to continue contributing to the company’s market share. For 2021 and 2022, the company’s revenues are projected to grow 58.1% and 6.8%, respectively.
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. As of Sep 30, 2021, almost $1.8 billion remained available under the company’s existing buyback authorization.
Other Stocks Worth a Look
A few other top-ranked stocks from the same space are Morgan Stanley (MS - Free Report) , Cowen Group, Inc. and Moelis & Company (MC - Free Report) . While MC currently sports a Zacks Rank #1 (Strong Buy), Cowen Group and Morgan Stanley carry a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Morgan Stanley’s current-year earnings has been unchanged over the past 60 days. MS’s shares have risen 48.3% in the past year.
Earnings estimates for COWN have moved 5.6% upward for 2021 over the past 60 days. Over the past year, Cowen Group’s shares have rallied 44.1%.
Moelis & Company recorded an upward earnings estimate revision of 15.1% for 2021 over the past 60 days. The stock has rallied 37.4% in the past year.
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4 Reasons to Add Schwab (SCHW) Stock to Your Portfolio Now
Charles Schwab (SCHW - Free Report) stock looks like a promising investment option now. The company’s solid fundamentals and good growth prospects are encouraging. Supported by a robust balance sheet and liquidity position, Schwab has been expanding through opportunistic acquisitions, which will likely keep supporting the top line.
The Zacks Consensus Estimate for the company’s 2021 earnings has been revised marginally upward over the past 60 days. Also, the consensus estimate for next year’s earnings has witnessed an upward revision of 2.4%. This shows that analysts are optimistic regarding the company’s earnings growth prospects. Thus, Schwab currently carries a Zacks Rank #2 (Buy).
Over the past year, shares of the company have rallied 63.3%, outperforming the industry’s growth of 38.5%.
Mentioned below are a few other factors that make Schwab stock worth betting on right now:
Earnings Growth: Schwab has witnessed earnings growth of 17.2% in the past three to five years. The uptrend is expected to continue in the near term. For 2021 and 2022, the company’s earnings are projected to grow 31.8% and 16.9%, respectively.
Also, its long-term (three-five years) expected earnings growth rate of 22.7% promises rewards for investors.
Inorganic Expansion Efforts: Since last 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 strengthen SCHW’s position in the brokerage industry and help diversify revenues. Driven by a strong liquidity position, Schwab remains well-poised to expand through inorganic efforts.
Revenue Strength: Schwab’s revenues witnessed a compounded annual growth rate (CAGR) of 11.8% over the last five years (2016-2020). Revenue growth has mainly been driven by the company’s efforts to enhance trading revenues, the rise in advice solution revenues and its inorganic growth efforts.
Further, several initiatives, including commission-free trading, reducing fees for the Schwab market cap-weighted index mutual funds and the launch of Schwab Stock Slices, are expected to continue contributing to the company’s market share. For 2021 and 2022, the company’s revenues are projected to grow 58.1% and 6.8%, respectively.
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. As of Sep 30, 2021, almost $1.8 billion remained available under the company’s existing buyback authorization.
Other Stocks Worth a Look
A few other top-ranked stocks from the same space are Morgan Stanley (MS - Free Report) , Cowen Group, Inc. and Moelis & Company (MC - Free Report) . While MC currently sports a Zacks Rank #1 (Strong Buy), Cowen Group and Morgan Stanley carry a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Morgan Stanley’s current-year earnings has been unchanged over the past 60 days. MS’s shares have risen 48.3% in the past year.
Earnings estimates for COWN have moved 5.6% upward for 2021 over the past 60 days. Over the past year, Cowen Group’s shares have rallied 44.1%.
Moelis & Company recorded an upward earnings estimate revision of 15.1% for 2021 over the past 60 days. The stock has rallied 37.4% in the past year.