Charles Schwab Corporation

Methodology

Schwab's brokerage and banking model creates earnings sensitivity to interest rates, market activity, and client cash balances. Asset gathering and net interest income provide some predictability. Focus on normalized earnings through rate cycles and the balance between transactional revenue volatility and steady asset-based fees.

Methodology

Schwab typically trades at moderate PEG ratios reflecting the asset-gathering model's stability offset by rate sensitivity and TD Ameritrade integration complexity. The metric should normalize for rate cycle impacts and focus on organic client asset growth. Compare to asset-gathering peers while considering Schwab's scale advantages and bank charter benefits.

Methodology

Schwab offers a modest dividend with management emphasizing steady capital returns as the TD Ameritrade integration progresses. The dividend adds some value though capital appreciation from asset gathering matters more. For brokerage firms, client asset growth and operating leverage often matter more than traditional income metrics.