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Charles Schwab Corp SCHW

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Morningstar’s Analysis

Valuation
Currency in USD
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

We Are Increasing Our Fair Value Estimate for Charles Schwab to $70; Shares Fairly Valued

Michael Wong, CFA, CPA Sector Director

Analyst Note

| Michael Wong, CFA, CPA |

We're increasing our fair value estimate for wide-moat Charles Schwab to $70 per share from $56. Our fair value estimate implies a price/2022 earnings multiple of 24 times and price/book multiple of about 2.4 times. Of the $14 increase in our fair value estimate, approximately $1.50 is from earnings since our previous valuation update, $13 is from higher-than-expected client net inflows and market appreciation, $5 is for changes in our forecast for net interest earning assets, $4 is for projecting higher trading revenue, negative $7 is for adjusting expenses, negative $5 is for increasing the tax rate that we use in our model, and $2.50 is from miscellaneous adjustments.

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Company Profile

Business Description

Charles Schwab operates in the brokerage, banking, and asset-management businesses. The company runs a large network of brick-and-mortar brokerage branch offices and a well-established online investing website. It also operates a bank and a proprietary asset management business and offers services to independent investment advisors. The company is among the largest firms in the investment business, with over $6.5 trillion of client assets at the end of 2020. Nearly all of its revenue is from the United States.

Contact
211 Main Street
San Francisco, CA, 94105
T +1 415 667-7000
Sector Financial Services
Industry Capital Markets
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2019
Stock Type Cyclical
Employees 32,500

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