I should have done better but I can not really complain yet. I hate when my papers do not run together smoothly.

Signature assignment: Charles Schwab investor presentation

David Vaughn

University of Phoenix

Finance/ 571

9/8/2020

James Traylor

Signature assignment: Charles Schwab investor presentation

            There may be no sure way to choose which stocks or bonds will be the most lucrative. No, the choices of stocks and the inherent risk with choosing them may be present in much of the industry. The risk and gamble of the stock market. A jumble of ideals, that is why I chose an interesting company such as Charles Schwab. This company offers financial advice and a way to buy, sell, and trade stock on a format that may be easy to access to masses of people. I chose Charles Schwab to discuss finances for my signature assignment.

The company and its ticker symbol

            NYSE: SCHW 35.96 ▲ 0.16 (0.45%) “Charles Schwab Corp reported Earnings Per Share (EPS) of 2.7 for FY 2019, an increase of 103.96% compared to FY 2016”. those are the earnings per share at this point according to (Charles Schwab Ticker symbol, 2020). Looking at the definition for EPS or earnings per share, we can see that it means; the company’s net profit divided by the number of shares it has outstanding which can indicate how much money a company can make for its share of stock (Earnings Per Share – EPS Definition – Investopedia, 2020). However, there are things we want to avoid when looking over this statistic is, not only the dilution of stock but how it fits into our investment goals. What type of venture is this? Will this bring the desired capital to the interested parties? Things of that nature, moving on…. Cash flow from operations “Charles Schwab Corp reported cash flow of 9.3B for FY 2019, an increase of 158.81% compared to FY 2016.” Cash flow from operations can be described as Operating cash flow represents the cash impact of a company’s net income (NI) from its primary business activities (Tuovila, 2020). So, as a consumer what should I expect from Charles Schwab? They answer may be this “Charles Schwab provided an easy to access format. This format provided a way to buy, sell, and trade stock.” This website Format Which was used on the internet still provided a way to gain information that allowed for financial and investment management. Maybe that format may allow for a discussion or advice to aid investors.

 Price to earnings ratio the price to earnings ratiodefined by (Hayes, 9) from Investopedia says: it is a measure of the amount of cash generated by a company’s normal business operations. It can indicate rather a company can generate positive cash flow.  I interject here to refer to (Brealy, 2020) with the fundamentals of finance and the use of WACC. Seeing that the cash flow can represent the ability to support its stake holders and can indicate if there will be an expansion or if it is necessary. The cash flow or capital will go hand and hand when calculating the WACC or weighted cost of capital in those types of decisions. So this will be a important statistic along with this calculation.

 Further on the topic The price to earnings for Charles Schwab is P/E 14.89. This is determined by dividing the current stock price by the earnings per share. 35.96 / 2.7 = * 13.31

The dividend yield according to (Charles Schwab dividend history, 2020) Charles Schwab (SCHW) as of September 04, 2020 is $0.72. The current dividend yield for Charles Schwab as of September 04, 2020 is 2.03%. To a company this is a ratio that shows how much a company pays out for its dividend each year relative to its stock price (dividend yield, 2020).

The yearly figures and other amounts

A simple matter of looking at the revenues to discuss the balance and what the numbers represent to us. For this presentation the point is to discuss the financials for a chosen company. Since I have chosen Charles Schwab the difference now is what is how to interpret company’s financial information.

So, the next segments will inform of the years revenues and similar statistics. Starting with Revenue estimates for the next 12 months; “Charles Schwab revenue for the twelve months ending June 30, 2020 was $10.384B, a 2.52% decline year-over-year (Revenue Charles Schwab revenue 2006 – 2020, 2020).” What I find interesting about this is that numbers can be deceiving. This is because, that when you recall past years and not including major events like a recession. What can you say were major financial break throughs? This leads me to believe this corner of the market is overwhelmed (very ambiguous) or underutilized (not many companies) leading to poorer numbers than cannot be clearly explained. More on the subject says that the 3yr revenues for Charles Schwab are as stated,” Charles Schwab annual revenue for (1) 2019 was $10.721B, a 5.81% increase from 2018. Charles Schwab annual revenue for (2) 2018 was $10.132B, a 17.57% increase from 2017. Charles Schwab annual revenue for (3) 2017 was $8.618B, a 15.24% increase from 2016. All positive signs that your investment may be worthwhile.  

            So, what does this mean, simply put increases in revenue can account for an increase in capital. Increases in capital means greater equity which in turn will have an increase in EPS. And with those types of numbers Charles Schwab investors may have had decent returns on their dividends or stock, possibly even for the most recent year that showed a decline in previous numbers. With the avoidance and worry about dilution and default risk this looks like a profitable company.

More financial numbers

The statement of cash flows from the previous 3yrs are; Operating 2017 was $4.097B, a 21.5% increase an increase from 2016, 2018 was $5.064B, a 23.6% increase from 2017, and in 2019 was $5.231B, a 3.3% increase from 2018.

Cash flows from Investing; (2017) $-20,473, (2018) $-40,555, and (2019) $-11,964. These numbers are stated in millions. Financing activities (2017) $22,599, (2018) $47,166, and in (2019) $-13,939. Seeing healthy numbers from the balance sheet in terms of revenue will hopefully let investors feel comfortable. Average trade volume (Avg Vol 8.19 M) the amount of cash flowing because of the movements of stock or financing. Current Stock prices $36.20 the 52wk high $51.65 and the 1yr estimated stock prices $39.62. The Market Cap $46.65B (billions).

I wanted to add that people want reliable and accurate information. I looked over two different websites ( (Revenue Charles Schwab revenue 2006 – 2020, 2020) (Charles Schwab Ticker symbol, 2020)) and the numbers were similar but slightly different. This may be a common occurrence when shopping for investments. So as I always say “the best investment is you”, so you should look for the safest return and not the biggest payout. Each scenario is different because sometimes the risk can lead to a great reward (Brealy, 2020).                                   

Market analysis

Discovering what do with your shares may be one of the gambles many investors will face. The answer to that for those that are as not as familiar with finance maybe to hire an investment manager. A simpler and less costly answer for some may be to use the analyst section on whatever platform they utilize for trading. Here in this section For Charles Schwab I used (Charles Schwab price, target & analyst ratings, 2020) The consensus there says to hold this piece of stock.

In my opinion that is what I expected to see. I feel that a company that is valuable in that sector would be almost a steal. Capitalizing on not many financial facilitators being well known and the fairly reasonable price for the stock makes Charles Schwab a very strong competitor.

Conclusion

This in my opinion is a very solid company. Not only are the numbers favorable, even the one year it has seen a decline (current). Shows promise, I mean the only reason that this company does not see another solid year may be because of current events (pandemic). It shows that this company completely influences its sector and will bounce back.  I feel that this is a strong purchase that if available will be a strong addition to any investors portfolio.

Bibliography

Brealy, D. (2020). Fundamentals of corporate finance. McGraw-Hill.

Charles Schwab dividend history. (2020, 9 5). Retrieved from Macrotrends: https://www.macrotrends.net/stocks/charts/SCHW/charles-schwab/dividend-yield-history

Charles Schwab price, target & analyst ratings. (2020, 9 6). Retrieved from Market Beat: https://www.marketbeat.com/stocks/NYSE/SCHW/price-target/

Charles Schwab Ticker symbol. (2020, 9 7). Retrieved from Bing: https://www.bing.com/search?q=charles+schwab+ticker&form=EDNTHT&refig=5c54724cdf954892947ea1d4f8986de6&mkt=en-us&msnews=1&PC=NMTS&sp=1&qs=FN&pq=charles+schwab+ticker&sc=4-21&cvid=5

dividend yield. (2020, 9 5). Retrieved from investopedia: https://www.investopedia.com/search?q=dividend+yield+

Earnings Per Share – EPS Definition – Investopedia. (2020, 9 2). Retrieved from investopedia: http://www.investopedia.com/terms/e/eps.asp

Hayes, A. (9, 4 2020). Price to earnings ratio. Retrieved from Investopedia: https://www.investopedia.com/terms/o/operatingcashflow.asp#:~:text=Operating%20Cash%20Flow%20%28OCF%29%201%20Understanding%20Operating%20Cash,…%203%20Importance%20of%20Operating%20Cash%20Flow.%20

Revenue Charles Schwab revenue 2006 – 2020. (2020, 9 5). Retrieved from Macrotrends: https://www.macrotrends.net/stocks/charts/SCHW/charles-schwab/revenue

Tuovila, A. (2020, 9 4). Operating Cash Flow. Retrieved from investopedia: https://www.investopedia.com/terms/o/operatingcashflow.asp#:~:text=Operating%20Cash%20Flow%20%28OCF%29%201%20Understanding%20Operating%20Cash,…%203%20Importance%20of%20Operating%20Cash%20Flow.%20