Charles Schwab Corp SCHW

Charles Schwab Earnings: Clear Signs of Positive, Medium-Term Earnings Narrative in Q1 Results

There were clear signs of Charles Schwab’s positive, medium-term earnings narrative in its first-quarter results. The firm reported net income to common shareholders of $1.25 billion, or $0.68 per diluted share, on $4.7 billion of net revenue. Excluding acquisition-related and restructuring costs, adjusted diluted EPS was $0.74. Net revenue was 7% lower than a year ago, but more importantly, net revenue increased 6% sequentially. This was the company’s first sequential increase in net revenue since the third quarter of 2022. There was broad strength across revenue lines with trading increasing 7%, asset management increasing 9%, and net interest revenue increasing 5%. Adjusted expenses were little changed from a year ago at $2.8 billion. We don’t anticipate making a material change to our $73 fair value estimate for wide-moat Charles Schwab and assess shares are currently fairly valued.