Charles Schwab Upgraded by Investor's Business Daily

The Charles Schwab Corporation (SCHW) had its relative strength rating upgraded by Investor's Business Daily last week, although its score remains below an 80, which is considered the minimum level for an ideal score. Investor's Business Daily increased its relative strength rating on Charles 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.

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Shares of Schwab were recently trading down $0.05 or 0.11% to $44.60. So far this year, the stock is up more than 7%. Investor's Business Daily noted in its report that Schwab ranks fourth among its rivals in the finance-investment banking/brokers industry group, with Houlihan Lokey, Inc. (HLI) ranked first.

With shares of Charles Schwab gaining ground in October, insiders have moved to sell some of their holdings in the discount broker. According to filings with the Securities and Exchange Commission in late October, Charles Schwab, founder of the company, sold 5,065 shares at a price of $44.778 per share for a total of $226,810. After the stock sale, Schwab owns 92,301,913 shares. Meanwhile, Marie Chandoha, president and CEO of Charles Schwab Investment Management, unloaded 7,000 shares at a price of $45.59 per share for a total of $319,130. After the stock sale, the executive owns zero shares of Charles Schwab, according to the filing.