Schwab's financial performance in 2023 was challenging, with a decline in stock price and lower revenue and earnings compared to the previous year.
The Ameritrade conversion has been successful, with about 90% of accounts and assets accurately converted. Attrition is tracking below estimates.
Client flows remained strong in 2023, with net new assets slightly above $300 billion. Core net new assets from original Schwab clients were about $30 billion higher.
Schwab's focus on value, service, transparency, and trust continues to resonate with clients. The company received high scores for investor satisfaction and trust.
Investments are being made to enhance scale and efficiency, win-win monetization, client segmentation, and ease of doing business. These investments will support organic growth and improve the client experience.
Financial performance in 2024 is expected to be transitional but steadily improving throughout the year. Revenue could be 0% to 10% higher than the Q4 2023 run rate, with an adjusted pre-tax margin in the mid-40s. Capital levels are strong, and opportunistic buybacks may resume in the future.
Current Fair Value
Undervalued by 66.6% based on the discounted cash flow analysis.