Shares of financial services major The Charles Schwab Corporation (SCHW) gained 3.6% on Friday to close at $81 after the company reported better-than-expected results for the third quarter ended September 30, 2021. The strong results can be attributed primarily to the growth witnesses in revenues.
Charles Schwab reported quarterly revenues of $4.57 billion, up 87% from the prior year’s figure of $2.45 billion. Further, the revenue figure topped the consensus estimate of $4.52 billion. This growth was primarily driven by a 51.2% year-over-year rise in net interest revenues, which also made up 44.1% of the total net revenues. The revenue growth was also aided by asset management and administration fees, which stood at $1.10 billion and witnessed a rise of about 28%.
The company reported quarterly earnings of $0.84 per share, up 65% from the prior year’s figure of $0.51. Moreover, the same topped the consensus estimate of $0.81 per share.
The CEO of Charles Schwab, Walt Bettinger, said, “While bullish sentiment largely persisted throughout the third quarter, debates regarding the overall pace of economic growth, the potential path of inflation, and the ultimate impact of certain global market disruptions weighed on this optimism – contributing to the S&P 500® ending September essentially flat versus June 30. Through it all, investors consistently turned to Schwab as a trusted financial partner, opening over a million new brokerage accounts for the fourth consecutive quarter – bringing year-to-date new brokerage accounts to 6.0 million. We generated core net new assets of $139.0 billion in the quarter, pushing asset gathering for the first nine months of the year to $396.0 billion, representing an 8% annualized organic growth rate. Total client assets ended September at $7.61 trillion, up from $6.69 trillion at year-end 2020.” (See Charles Schwab stock chart on TipRanks)
Recently, Jefferies analyst Daniel Fannon reiterated a Buy rating on the stock with a price target of $89, which implies upside potential of 10% from current levels.
Consensus among analysts is a Strong Buy based on 8 Buys and 2 Holds. The average Charles Schwab price target of $89.89 implies upside potential of 11.11% from current levels.
Charles Schwab scores a “Perfect 10” from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations. Shares have gained about 108% over the past year.