Charles Schwab to Report Earnings, Stock (SCHW) At Fresh Highs

The Charles Schwab Corporation (NYSE: SCHW) heads into this morning's earnings on the back of a new 52 week high for the stock. Market expectations are high for the print, somewhat unsurprisingly after a 50% rally in the last year.

Analysts are projecting an Earnings Per Share (EPS) of $1.07, a substantial increase from the $0.73 reported in the same quarter last year. Revenue is expected to come in at $5.64billion, a 20% rise on the same period last year.

Charles Schwab's stock price hit a high of $93.43 in Thursday's session, and are following that up with early gains of 1.6% through the pre-market, indicating a price around the mid $94 range. With earnings coming before the open, we can expect to see some shifts in this either way as markets digest the print.

Schwab's current price is notably above both its 50-day Simple Moving Average (SMA) and its 200-day SMA. This technical indicator strongly suggests a bullish trend, indicating sustained positive momentum in the stock's price action. However, relying solely on technical analysis can be misleading; a deeper dive into the company's fundamentals and the broader macroeconomic environment is essential for a comprehensive understanding.

The plan to offload customer deposits to external partners aims to enhance capital efficiency, a move lauded by some analysts as a prudent step towards optimizing Schwab's balance sheet. Bettinger's rationale emphasizes the desire to reduce capital intensity while preserving the economics generated from owning a bank, suggesting a strategic realignment rather than a complete retreat from the banking sector.

Schwab's robust fourth-quarter earnings in the previous year offer a counterpoint to concerns. A 20% year-over-year increase in revenue, coupled with a significant surge in adjusted net income, underscores the company's underlying strength and its ability to generate substantial profits. Strong client engagement, increased margin utilization, and record net inflows into Managed Investing Solutions, were noted as points of success for the firm, highlighting the effectiveness of Schwab's diversified business model.

Analyst ratings on SCHW remain split, reflecting the inherent uncertainties surrounding the stock's future performance. Deutsche Bank's upgraded price target suggests confidence in Schwab's growth potential, while Citi's more cautious stance underscores the risks associated with the company's strategic shifts and the broader economic outlook. The current price has overtaken the average price target on the street, with many likely looking to this morning's print before considering whether any reassessment is required.