Schwab Stock Touches 52-Week High: Is This the Right Time to Buy SCHW?

Charles Schwab SCHW touched a 52-week high of $92.65 during yesterday’s trading session. Over the past three months, the stock has gained 23.1%, underperforming the industry but outperforming the Zacks Finance sector and the S&P 500. While it fared better than its close peer, LPL Financial Holdings Inc. LPLA, it underperformed Robinhood Markets, Inc. HOOD.

Three Months' Price Performance

Does SCHW stock have more upside left despite hitting a 52-week high? Let us find out.

Factors Likely to Drive Schwab Stock

Volatility Amid Tariff Policy Concerns to Drive Revenues: On Feb. 13, President Donald Trump announced a plan for “reciprocal” tariffs to reduce the fiscal trade deficit. This move brought concerns regarding potential tariff wars, leading to heightened market volatility.

Though the situation has eased to some extent in light of a pause on tariffs as countries negotiate, uncertainty continues to linger surrounding the impact of tariff policies. This is expected to contribute to an increase in Schwab’s trading revenues, given the heightened volatility and increased market participation. Since this is an industry-wide phenomenon, LPL Financial and Robinhood are also expected to enjoy the benefits of increased volatility.

Also, Schwab’s efforts to boost its client base in advisory solutions will further support top-line expansion. The acquisitions of TD Ameritrade, USAA’s Investment Management Company, Wasmer, Schroeder & Company, LLC and the buyout of Motif’s technology and intellectual property have strengthened the company’s position and helped diversify revenues.
 
The company’s total client assets recorded a five-year CAGR of 20.1% (ended 2024), primarily driven by the acquisitions completed during this period and market appreciation. The uptrend continued during the first three months of 2025. As of May 31, 2025, the company’s total client assets were $10.35 trillion.

Given higher client assets, Schwab’s total net revenues have witnessed a compound annual growth rate (CAGR) of 12.8% over the past five years (2019-2024), with managed investing solutions revenues recorded a CAGR of 12.2%. The momentum continued for both metrics in the first quarter of 2025.
 
Thus, the company’s focus on higher client assets and advisory solution client base, alongside increased volatility given tariff policy concerns, is likely to drive its revenues going forward.

Relatively Higher Interest Rates to Aid Net Interest Margin: The Federal Reserve has kept interest rates unchanged this year, given the tariff policy headwinds. This will likely aid Schwab’s net interest margin (NIM) and net interest revenue (NIR) expansion.

Additionally, the company’s focus on repaying high-cost bank supplemental funding balances will support the metric. By 2024-end, the bank's supplemental funding balance was down 49% to $49.9 billion from the peak of $97.1 billion recorded in May 2023. Hence, NIM increased to 2.12% in 2024 from 1.98% in 2023, 1.78% in 2022 and 1.45% in 2021.

Schwab’s NIR witnessed a CAGR of 7% over the five years ended 2024. The momentum continued for both NII and NIM in the first three months of 2025 as the company reduced supplemental funding.

The company expects NIM to keep expanding as funding costs come down on the back of the reduction of bank supplement funding and higher rates.

SCHW Rewards Shareholders: As of March 31, 2025, Schwab’s cash and cash equivalents were $35 billion and total debt (comprising long-term debt, Federal Home Loan Bank borrowings and other short-term borrowings) was $39.9 billion.

The company remains focused on maintaining a low-cost capital structure, which enables it to sustain capital distributions. Schwab targets a common dividend payout ratio of 20-30% of GAAP earnings.
 
In January 2025, it announced an 8% hike in quarterly dividend to 27 cents per share. In the past five years, the company raised dividend payouts four times. On the other hand, LPL Financial has just raised its dividend once during the same period, while Robinhood has never paid dividends.

Though Schwab has a share repurchase program in place, it will be opportunistic in buying back shares. As of March 31, 2025, roughly $7.2 billion worth of authorization remained available.

Parting Thoughts on Schwab Stock

Solid revenue growth, organic and inorganic expansion initiatives to diversify business, and a strong balance sheet will aid Schwab’s financials.
 
Over the past month, the Zacks Consensus Estimate for earnings of $4.28 and $5.06 per share for 2025 and 2026, respectively, have remained unchanged. The projected figures imply growth of 31.7% for 2025 and 18.3% for 2026.

Estimate Revision Trend

However, Schwab has been experiencing a persistent rise in operating expenses. While total expenses declined in 2024 as the company undertook actions to streamline its operations post-TDA-integration, the metric witnessed a CAGR of 15.2% over the last five years (2019-2024).
 
The uptrend continued in the first three months of 2025. As the company invests in long-term growth, rising headcount, regulatory costs, and targeted marketing are expected to keep operating expenses elevated.

Nonetheless, tariff policy concerns and relatively higher interest rates are expected to support the company’s top line and NIM through higher client volatility. Hence, Schwab remains a lucrative bet for investors now. Those who already own it can hold for now for a robust long-term return.

Schwab currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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