Skip to Content

Charles Schwab Corp SCHW

Rating as of

Morningstar’s Analysis

Currency in USD
Is it the right time to buy or sell?
Find out with Morningstar Premium
Is it the right time to buy or sell?
Find out with Morningstar Premium

1-Star Price


5-Star Price


Economic Moat




Realization of Merger Synergies in Coming Years Provides Upside to Charles Schwab-TD Ameritrade

Michael Wong, CFA, CPA Sector Director

Analyst Note

| Michael Wong, CFA, CPA |

We believe the market is undervaluing the medium- to long-term value creation from wide-moat Charles Schwab and narrow-moat TD Ameritrade’s merger synergies. There are clearly near-term headwinds to earnings from lower interest rates and uncertainty over the valuation of the stock market and client asset levels, which we project will lead to earnings being around 40% lower in 2021 compared with 2019 for Charles Schwab on an organic basis. However, we also believe that there are clear medium- to long-term tailwinds, primarily from the $3.5 billion to $4 billion of merger synergies. The expense synergies should be fully realized by the beginning of year four of the merger, while the revenue synergies will phase in over the next decade, providing a persistent earnings tailwind. After gaining more confidence in the valuation of their merger synergies, we recently increased our fair value estimate for Charles Schwab to $45.50 and for TD Ameritrade to $49. We assess shares of both firms are undervalued and trading at an attractive discount to many companies in the financial sector.

Read Full Analysis

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 mutual fund business and offers services to independent investment advisors. The company is among the largest firms in the investment business, with over $4 trillion of client assets at the end of 2019. Nearly all of its revenue is from the United States.

211 Main Street
San Francisco, CA, 94105
T +1 415 667-7000
Sector Financial Services
Industry Capital Markets
Most Recent Earnings Mar 31, 2020
Fiscal Year End Dec 31, 2019
Stock Type Cyclical
Employees 20,200