Charles Schwab Growing Faster Than Its Peers As It Gains Market Share

Charles Schwab Corp SCHW reported Q3 EPS ahead of expectations. The company’s growth continues to be higher than peers, backed by market share gains and product innovation, Argus’ Stephen Biggar said in a report. He maintained a Buy rating on Charles Schwab, while raising the price target from $34 to $36.

Charles Schwab posted Q3 EPS at $0.35, beating the consensus estimate by $0.02. The company’s brokerage accounts grew 4 percent y/y and crossed 10 million for the first time during the quarter. Client assets grew 13 percent to $2.73 trillion.

Growing Faster Than Peers

Analyst Biggar expects Charles Schwab to generate above-peer-average growth on the back of its innovative products and continued market share gains.

“The company has challenged industry pricing standards with many low- or no-cost offerings, including its popular ETFs. It has also seen rapid growth in its ETF-based Intelligent Portfolios, with a 30% increase in assets in 2015,” Biggar wrote.

The analyst pointed out that Charles Schwab had been able to grow its core net assets by more than $100 billion in each of the last four years, and appears to be on track to do the same in 2016 as well. The company continues to attract cost-conscious clients from other financial services providers.

“Given the substantial overcapacity in the financial services industry, management expects market share gains to be a primary growth driver and believes that the ability to build relationships and offer quality advice will be key determinants of success,” Biggar added.

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