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

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

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 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!