Analysts Are Updating Their The Charles Schwab Corporation (NYSE:SCHW) Estimates After Its Full-Year Results

Last week, you might have seen that The Charles Schwab Corporation (NYSE:SCHW) released its annual result to the market. The early response was not positive, with shares down 3.8% to US$62.72 in the past week. Revenues of US$19b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$2.54, missing estimates by 4.0%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Charles Schwab

After the latest results, the 16 analysts covering Charles Schwab are now predicting revenues of US$20.1b in 2024. If met, this would reflect a credible 6.8% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to jump 33% to US$3.38. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$20.5b and earnings per share (EPS) of US$3.47 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

The consensus price target held steady at US$72.37, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Charles Schwab, with the most bullish analyst valuing it at US$85.00 and the most bearish at US$58.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Charles Schwab's revenue growth is expected to slow, with the forecast 6.8% annualised growth rate until the end of 2024 being well below the historical 17% p.a. growth over the last five years. Compare this to the 542 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 8.1% per year. Factoring in the forecast slowdown in growth, it looks like Charles Schwab is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at US$72.37, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Charles Schwab going out to 2026, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 3 warning signs for Charles Schwab (1 shouldn't be ignored!) that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.