Charles Schwab Tips Highs On Growth and Asset Surge

November 22, 2017 — 3:16 AM EST

Rewind 18 months, and shares of The Charles Schwab Corporation (SCHW​) were struggling to pull out of a 31% free fall that greeted investors in the first weeks of trading in 2016. Now, with three quarters of strong growth behind it and a surge in assets under management during 2017, the San Francisco-based discount broker's stock is pushing to new highs. The shares closed up 2.1% on Tuesday at $46.08. 

For the month of October, Charles Schwab reported that total client assets jumped 21% year over year and 2% sequentially, coming in at a record $3.26 trillion.

According to Investor's Business Daily, based on technical analysis, Schwab stock is within striking distance of hitting a new high. The publication has a Composite Rating of 96 on Charles Schwab, putting the company in the number five spot in the investment bankers and brokers industry group. E*TRADE and TD Ameritrade are in the number two and number three positions, respectively. Schwab also earned passing markets from Investor's Business Daily for EPS growth in 2017 and its annual pre-tax profit margin, but the broker came up short regarding its three-year annual growth rates for earnings and sales.

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Shares of Charles Schwab were recently up $0.77, or 1.71%, to $45.89. The stock is up nearly 10% so far in 2017. Since the end of August, Schwab shares have gained more than 18%.

Earlier this month, Investor's Business Daily upgraded its relative strength rating on Schwab to 74 from 69, saying that the stock is within a buy zone after moving past a $44.22 buy point. The publication partially attributed the upgrade to Schwab's 24% earnings growth in its just reported third quarter. For the three-month period ending in September, the San Francisco-based discount broker reported earnings per share of $0.42 and revenue of $2.165 billion. According to Zacks Investment Research, analysts had expected Schwab to report earnings per share of $0.41 and revenue of $2.9 billion. Had the broker delivered on the revenue front, it would have represented a 14% year-over-year increase.

During the third quarter, the company said that net interest revenue increased 28% to $1.08 billion, while revenue from asset management fees jumped 8% to $861 million. Schwab was able to open 216,000 new retail brokerage accounts, which is up 29% from last year's third quarter. Total client assets increased 17% to $3.18 trillion, and core net new assets jumped 72% to $51.6 billion. On the negative side, trading revenue declined 21% to $151 million.