The Charles Schwab Corporation (NYSE: SCHW) and Raymond James Financial (NYSE:RJF) are both large-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, profitability, risk, dividends, earnings and analyst recommendations.
Volatility and Risk
The Charles Schwab Corporation has a beta of 1.63, meaning that its stock price is 63% more volatile than the S&P 500. Comparatively, Raymond James Financial has a beta of 1.65, meaning that its stock price is 65% more volatile than the S&P 500.
Insider and Institutional Ownership
79.4% of The Charles Schwab Corporation shares are owned by institutional investors. Comparatively, 70.9% of Raymond James Financial shares are owned by institutional investors. 12.0% of The Charles Schwab Corporation shares are owned by insiders. Comparatively, 11.2% of Raymond James Financial shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
The Charles Schwab Corporation pays an annual dividend of $0.32 per share and has a dividend yield of 0.8%. Raymond James Financial pays an annual dividend of $0.88 per share and has a dividend yield of 1.1%. The Charles Schwab Corporation pays out 21.5% of its earnings in the form of a dividend. Raymond James Financial pays out 20.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Raymond James Financial has increased its dividend for 4 consecutive years. Raymond James Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Valuation & Earnings
This table compares The Charles Schwab Corporation and Raymond James Financial’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|The Charles Schwab Corporation||$8.08 billion||6.74||$2.00 billion||$1.49||27.28|
|Raymond James Financial||$6.12 billion||1.86||$605.03 million||$4.21||18.85|
The Charles Schwab Corporation has higher revenue and earnings than Raymond James Financial. Raymond James Financial is trading at a lower price-to-earnings ratio than The Charles Schwab Corporation, indicating that it is currently the more affordable of the two stocks.
This is a summary of current ratings and price targets for The Charles Schwab Corporation and Raymond James Financial, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|The Charles Schwab Corporation||0||6||10||0||2.63|
|Raymond James Financial||0||3||3||0||2.50|
The Charles Schwab Corporation presently has a consensus target price of $44.27, suggesting a potential upside of 8.90%. Raymond James Financial has a consensus target price of $88.80, suggesting a potential upside of 11.91%. Given Raymond James Financial’s higher possible upside, analysts plainly believe Raymond James Financial is more favorable than The Charles Schwab Corporation.
This table compares The Charles Schwab Corporation and Raymond James Financial’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|The Charles Schwab Corporation||26.73%||15.41%||0.98%|
|Raymond James Financial||9.78%||13.37%||2.19%|
The Charles Schwab Corporation beats Raymond James Financial on 10 of the 17 factors compared between the two stocks.
The Charles Schwab Corporation Company Profile
The Charles Schwab Corporation (CSC) is a savings and loan holding company. The Company, through its subsidiaries, engages in wealth management, securities brokerage, banking, money management and financial advisory services. The Company provides financial services to individuals and institutional clients through two segments: Investor Services and Advisor Services. The Investor Services segment provides retail brokerage and banking services, retirement plan services and other corporate brokerage services. The Advisor Services segment provides custodial, trading, and support services as well as retirement business services. The Company offers a range of products to address individuals’ varying investment and financial needs. Its product offerings include brokerage, mutual funds, ETFs, advice solutions, banking and trust. Brokerage provides a range of brokerage accounts with cash management capabilities. Mutual funds offer third-party mutual funds through the Mutual Fund Marketplace.
Raymond James Financial Company Profile
Raymond James Financial, Inc. (RJF) is a financial holding company. The Company’s subsidiaries include Raymond James & Associates, Inc. (RJ&A), Raymond James Financial Services, Inc. (RJFS), Raymond James Financial Services Advisors, Inc. (RJFSA), Raymond James Ltd. (RJ Ltd.), Eagle Asset Management, Inc. (Eagle), and Raymond James Bank, N.A. (RJ Bank). It operates through five segments: Private Client Group (PCG), Capital Markets, Asset Management, RJ Bank and the Other segment. The Private Client Group segment includes the retail branches of the Company’s broker-dealer subsidiaries located throughout the United States, Canada and the United Kingdom. The Capital Markets segment includes institutional sales and trading in the United States, Canada and Europe. The Asset Management segment includes the operations of Eagle, the Eagle Family of Funds and other fee-based asset management programs. RJ Bank segment provides corporate loan, securities based loans (SB) and residential loans.
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