Does Charles Schwab Corp (SCHW) Offer Investors Safety?

Page 1 of 2

Charles Schwab Corp (NYSE:SCHW) has been a standout name in the investment brokerage industry for decades. Investors have liked the company because of its fiscal responsibility and quality management. Has Charles Schwab Corp (NYSE:SCHW) done enough to maintain this reputation? Is there a better option in the space?

Charles Schwab Corp (NYSE:SCHW)

Important numbers

Charles Schwab has consistently improved revenue over the past three years. Revenue also increased 8.50% last quarter on a year over year basis. However, earnings have been inconsistent.

The good news is that Charles Schwab Corp (NYSE:SCHW) is consistently profitable. Over the past five years, diluted EPS ranged between $0.38 and $1.05.  Investors liked the 5.60% year over year earnings increase last quarter, which helped drive the stock price higher.

Have good numbers led to Charles Schwab outperforming peers E TRADE Financial Corporation (NASDAQ:ETFC) and TD Ameritrade Holding Corp. (NYSE:AMTD) so far this year?



SCHW data by YCharts

For the most part, the industry has traded together, but it’s always nice to see when your investment comes in first place. An added bonus is the 1.10% yield. That said, TD Ameritrade Holding Corp. (NYSE:AMTD) currently yields 1.50% in dividends. Unfortunately, E TRADE Financial Corporation (NASDAQ:ETFC) doesn’t offer any yield. However, you shouldn’t knock E*TRADE for this. It has too much debt to offer such a luxury.

Charles Schwab Corp (NYSE:SCHW), on the other hand, has a very strong cash position, which increases the likelihood of more capital being returned to shareholders in the future.

Below are the debt-to-equity ratios for each company:

Schwab: 0.17

E*TRADE: 1.57

TD AMERITRADE 0.28

Charles Schwab Corp (NYSE:SCHW) and TD Ameritrade Holding Corp. (NYSE:AMTD) have excellent debt management, while E*TRADE has been working to improve in this area for many years.

What about valuation and profit margin?



SCHW Forward PE Ratio data by YCharts

By this point, it should be evident that E TRADE Financial Corporation (NASDAQ:ETFC) is the riskiest investment. There would be little sense investing in a company that has similar valuation to peers while having debt issues and a negative profit margin.

The irony here is that the short position on Ameritrade (11.10%) is higher than the short position on E*TRADE (6.40%). For the record, Charles Schwab has a short position of 4.20%.

Company positives and negatives

Charles Schwab Corp (NYSE:SCHW)’s impressed last quarter, but this should come as no surprise to those who are familiar with the the company; it has a history of beating expectations. And companies with that kind of history tend to keep the trend going.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!