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Charles Schwab reported less profits than Wall Street expected.
Victor J. Blue/Bloomberg
Charles Schwab stock is tumbling after the discount broker missed first-quarter earnings and revenue estimates.
Schwab’s (ticker: SCHW) adjusted earnings per share were 77 cents compared with the consensus estimate for 84 cents, according to a survey of analysts tracked by FactSet. Revenue of $4.67 billion was short of the $4.83 billion analysts had expected.
Charles Schwab said its expenses during the quarter went up by 3% to $2.8 billion versus last year. After adjusting for acquisitions and other costs, expenses were $56 million higher than what Piper Sandler analysts predicted, and 4% more than last year.
Chief Financial Officer Peter Crawford said in the earnings release that the increase in costs was “consistent with our expectations as we invest in our people and our ability to support current and ongoing growth in our client base.”
Piper Sandler analyst Richard Repetto said the miss resulted from lower-than- anticipated revenues. He rates the stock at Overweight with a $110 price target but said he will review those calls after taking a closer look at the results. Schwab had also missed fourth-quarter EPS estimates.
Schwab stock was down almost 9% to $75.48 on Monday, compared with an 0.4% drop in the
S&P 500 index. Shares are down more than 10% so far this year, while the index is down about 8%.
Last Wednesday, Morgan Stanley analyst Mike Cyprys made Schwab his Top Pick, saying the price represented a compelling entry point in the shares. He continues to rate the stock at Overweight with a $132 price target.
Out of 19 analysts tracked by FactSet, 13 are bullish on the stock, while six rate it as Hold. The average target for the stock price is $105.93.
Schwab’s core net new assets for the latest quarter were $120.5 billion, while total client assets were $7.86 trillion, up 11% compared with the previous year
Write to Karishma Vanjani at [email protected]
Source: https://www.barrons.com/articles/schwab-stock-earnings-51650290685?siteid=yhoof2&yptr=yahoo