SCHW - Raymond James: Ignore Schwab Earnings Bank Is Solid

2024-07-29 09:15:05 ET

Summary

• Charles Schwab shares dropped 9% after a disappointing quarterly report, announcing a shift to rely more on third-party banks for capital and funding risks. This caused Raymond James Financial, Inc. stock to sell off.
• However, Raymond James is outperforming Schwab operationally with better balance sheet management, strategic foresight, and strong financial resilience, leading to my strong buy opinion.
• Raymond James' strong growth in assets under management, revenue, and strategic initiatives position them as an ideal long-term investment with potential upside.

Investment Thesis

Over the last two weeks, The Charles Schwab Corporation's ( SCHW ) shares suffered a drop following their release of a disappointing quarterly report. The financial services company revealed lower-than-expected figures for bank deposits , net interest revenue, and new brokerage accounts, causing their stock to decline by 9% that day?. This decline was exacerbated by CEO Walt Bettinger's announcement during the earnings call that Schwab plans to shrink its bank operations and rely more on third-party banks to manage capital and funding risks. It's a big shift in operations for one of America’s largest brokerages with a bank. Many took this as a sign that the model was broken....

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