4 Reasons To Add Schwab Stock To Your Portfolio Right Now

SCHWAB(CHAS) Price

SCHWAB(CHAS) Price | SCHWAB(CHAS) Quote

Here’s Why Schwab Is an Attractive Choice

Rising Rates to Favor Revenue Improvement: Schwab’s all three revenue components, namely, Asset management and administration fees, net interest revenue and trading revenue are likely to see a rise on the back of a favorable interest rate environment.

Management does not expect a significant impact of the rate hike next month on its financials, perhaps owing to a year-over-year fall in long-term interest rates. However, we believe rising rates will lead to a further decline in management fee-waivers. The company has recorded a substantial decrease in fee waivers in the first nine months of 2016 (primarily driven by the Dec 2015 rate hike).

Moreover, further rise in rates is expected to lead to a notable improvement in net new assets and total client asset balances. Also, enhanced client confidence is expected to bring about a rebound in trading revenues. These are likely to bolster non-interest revenues at Schwab.

For 2016, projected sales growth for Schwab is 16.8% compared with nil for the industry.

Earnings per Share: Schwab is expected to deliver strong earnings performance in the near term as indicated by the company’s projected EPS growth (F1/F0) of 33.5% compared with a decline of 2.3% for the industry.

In addition, the company’s long-term (3–5 years) estimated EPS growth rate of 17% (compared with the industry growth rate of 14.8%) promises rewards for investors over the long run.

Superior Return on Equity: Schwab’s ROE of 9.68%, as compared with the industry average of 9.09%, reflects the company’s commendable position among its peers.

Upward Earnings Estimate Revisions: Over the past 60 days, the company has seen 11 upward estimate revisions, while no estimate has been revised lower for 2016. For 2017, the stock is seeing a ratio of 8:1 in terms of up and down revisions.

The Zacks Consensus Estimate for 2016 increased 2.4% to $1.29 per share in the past month; while that for 2017 has risen 3.3% to $1.56 per share during the same period.

Other Investment Brokers Worth a Look

Apart from Schwab, you can consider other investment brokerage firms including Stifel Financial Corp. (NYSE:SF) , E*TRADE Financial Corp. (NASDAQ:ETFC) and Evercore Partners Inc. (NYSE:EVR) .

Stifel Financial witnessed an upward earnings estimate revision of 8.9% over the past 60 days. Also, its share price is up 16.1% year to date. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

E*TRADE currently carries a Zacks Rank #2. It has witnessed an upward earnings estimate revision of 5.9% over the past 60 days and its share price is up nearly 15% year to date.

Evercore Partners also carries a Zacks Rank #2 and has witnessed an upward earnings estimate revision of 4% over the past 60 days. Its share price has risen 23.5% year to date.

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