Charles Schwab Corporation
) is an online brokerage, banking and financial services firm. It
competes with firms like E-Trade (
), Ameritrade (
) and Bank of America (
We have launched coverage on Charles Schwab with a
price estimate for the company's stock, in line with market
Launch of Coverage on Charles Schwab; $19.89 Price
We have broken down our analysis of Charles Schwab into four
- Interest on Deposits, Loans & Securities
- Mutual Fund & Other Investment Fees
- Trading Commissions
- Maintenance Fees & Others
Charles Schwab's at a Glance
The Charles Schwab Corporation engages in securities brokerage,
banking, and related financial services through its subsidiaries.
Its biggest, and oldest, subsidiary is Charles Schwab & Co.,
Inc. which is a securities broker-dealer with a pan-U.S. presence
through more than 300 branches. The brokerage arm had more than 8
million client brokerage accounts at the end of 2010.
Other subsidiaries include the Charles Schwab bank, which has
690,000 banking accounts, and Charles Schwab Investment Management,
the investment advisor for Schwab's proprietary mutual funds
(Schwab Funds). Through these subsidiaries, Charles Schwab manages
a combined $1.57 trillion in client assets.
Charles Schwab's Advantage in the Online Brokerage
Online Brokerage firms compete on various aspects including
commissions & fees, types of investment products offered,
research & advice for investors, and customer service. Charles
Schwab has created a niche in the highly competitive industry by
providing one of the best research services to its customers. The
company's focus on providing financial advice to individual
investors while maintaining a moderate commission fee has attracted
customers and helped it achieve a 5% annual growth in the number of
active brokerage accounts.
We believe that the strength of Charles Schwab's investment
research arm allows this segment to contribute the most value to
the company. Interest on Deposits, Loans & Securities
represents almost 50% of Charles Schwab's stock value, by our
estimates. As net interest return is dependent on the investments
undertaken by the firm, the value of this return is highly
dependent on the efforts of the research arm.
The combined value of the deposits, loans and securities at
Charles Schwab has grown significantly over the past few years.
Most notably, this value increased by almost 25% from $43.8 billion
to $53.5 during the global economic recession of 2009. This can be
attributed to the large number of customers switching to Charles
Schwab from its competitors during that period.
Moreover, the company also maintained positive returns on its
investments through the economic crisis, and also reported a net
profit for the financial year 2009 - which also points to Charles
Schwab's distinct advantage through its focus on research and
financial advice for investors.
the complete $19.89 Trefis price estimate for
Charles Schwab's stock.