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Charles Schwab (SCHW) Climbs 0.9% Ahead of Earnings: What To Watch

Shares of Charles Schwab SCHW popped nearly 1% during regular trading hours Monday, just one day before the financial services firm is set to release its latest quarterly financial results. Let’s see what investors should expect.

JP Morgan JPM and Citigroup C kicked off second-quarter earnings season with a bang last Friday, topping earnings estimates. Meanwhile, embattled baking power Wells Fargo WFC stumbled. This mixed bag might put even more pressure on Charles Schwab, even though the investment and banking industry should be benefitting from rising short-term interest rates.

Our latest Zacks Consensus Estimates are calling for Charles Schwab to report revenue of $2.5 billion, which would mark over a 17% climb from the year-ago period. On top of this strong top-line growth estimate, Charles Schwab is expected to see its adjusted earnings skyrocket by 48.7% to hit $0.58 per share.

Investors should also note that SCHW’s quarterly earnings revisions activity has been mixed recently. The company has earned one upward earnings estimate revision within the last seven days, against two downward changes. Furthermore, the Zacks Consensus Estimate has fallen by one cent within the last 30 days. Charles Schwab’s earnings estimate revision activity has helped contribute to its Zacks Rank #3 (Hold).

Moving on to SCHW’s stock price performance, investors might be pleased to note that shares of Charles Schwab are up roughly 19% over the last year, which tops the S&P 500’s 14.5% climb. However, more recently, shares of SCHW have sunk. The company has seen its stock price fall nearly 9% over the last six months, including a nearly 8% decline in the last month alone.  

With all that said, an earnings beat could help Charles Schwab stock in the short-term. To gauge how likely the firm is to outperform estimates Tuesday morning, we can turn to our exclusive Earnings ESP figure.

Zacks Earnings ESP (Expected Surprise Prediction) compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter. The Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change.

This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.

A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.

SCHW’s Most Accurate Estimate—the representation of the most recent analyst sentiment—calls for earnings of $0.57 per share, which comes in one cent below our current consensus estimate. Furthermore, Charles Schwab currently sports an Earnings ESP of -2.10% and a Zacks Rank #3 (Hold). This means that our model is inconclusive about if the firm might top estimates when it reports its Q2 results before the opening bell on Tuesday.

Make sure to check back here for our full analysis once Charles Schwab reports!

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JPMorgan Chase & Co. (JPM): Free Stock Analysis Report
 
Wells Fargo & Company (WFC): Free Stock Analysis Report
 
Citigroup Inc. (C): Free Stock Analysis Report
 
The Charles Schwab Corporation (SCHW): Free Stock Analysis Report
 
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