Charles Schwab: Get Ready For Multiple Quarters Of Margin Expansion (Archive)
Margin tailwinds and cost savings set Schwab up for sustained earnings and valuation upside.
This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.
Elevator Pitch
- Charles Schwab's Q2 FY23 results have compelled me to do a 180-degree turn in my stance on the stock; from a 'sell' to a 'strong buy'.
- Cash sorting issues are no more as there has been a sharp reduction in net new purchased money market fund flows.
- There are multiple levers for margin expansion. Reduction in high cost short-term borrowings is expected to boost NIMs, and expense reduction is another margin lever.
- Valuations are attractive as the stock trades at a 12.2% discount to its long-term PE.
Read the full article here.
Disclosures and Disclaimers
Past performance ≠ future results. Not investment advice. See full Disclaimer.
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