Sluggish EPS Urge Neutral Take On Charles Schwab Corp.

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Based in San Francisco, California, Charles Schwab Corporation (NYSE:SCHW) is a banking and brokerage business. The company provides financial services to individuals and institutional clients through two segments: Investor Services and Institutional Services. It is founded in 1971 by Charles R. “Chuck” Schwab and the company now employs more than 13,700 people around the world.It started its business as atraditional, brick and mortar brokerage firm and investment newsletter publisher.

The Charles Schwab Corporation (SCHW) closed Thursday’s trading session at $13.69.
Its 52-week low is $10.52 and 52-week high of $15.53. Analysts are currently neutral on the stock based on technical indicators.

GROWTH AND BALANCE SHEET
The company’s year on year growth in dividends per share remained flat while, earnings per share excluding extraordinary items increased by 84.89%. Additionally, on a five year annualized basis, both dividend per share and EPS growth ranked in-line with the industry average relative to its peers. SCHW uses little or no debt in its capital structure. Charles Schwab Corp. grew revenues by 10.43% while net income improved by 90.31% for last 5 years. These fundamentals lead us to the conclustion that overall company is doing well.

VALUATION

SCHW has a market cap of $17.35 billion. The company’s P/E of 20.33 is more than industry average. The stock is currently trading near its fair value. The beta of 1.29 implies high volatility of the stock with respect to the S&P 500. On October 25, The Board of Directors of Charles Schwab Corporation has declared a regular quarterly cash dividend of $0.06 per common share. The dividend is payable November 23, 2012 to stockholders of record November 9, 2012.

RECOMMENDATION for next 6 months: Overall view is NEUTRAL on Charles Schwab Corp.
The stock is doing comparatively good compare to its competitors. Recently, it has been suffering decline in stock price. The growth in dividends and EPS is not substantial enough to impress investors.