Charles Schwab Stock Surges on Q4 Earnings, Record Inflows

Charles Schwab (SCHW) stock surged Tuesday morning after the financial services company reported fourth-quarter results that topped analysts' expectations. The company's shares were up about 5.4% at 8:07 a.m. in early New York trading. The strong performance was driven by record net inflows into the company's managed investing solutions and encouraging client cash trends.



Schwab reported net income for the fourth quarter totaling $1.8 billion, or $.94 earnings per share. Excluding $177 million of pre-tax transaction-related and restructuring costs, adjusted net income and earnings per share equaled $2.0 billion and $1.01, respectively. The company's revenue grew by 20% year-over-year to $5.3 billion, driven by strong client engagement, increased margin utilization, and encouraging client cash trends.

The company's record net inflows into managed investing solutions totaled $55 billion for the year, with converted Retail Ameritrade clients accounting for around 35% of the total. Schwab's managed investing solutions, which include robo-advisory services and actively managed portfolios, have become increasingly popular among investors seeking professional guidance and personalized investment strategies.

Schwab's CEO, Rick Wurster, attributed the strong performance to the company's ongoing progress following the integration of TD Ameritrade clients and the firm's focus on managed investing solutions. "Record net inflows into our managed investing solutions helped lift 4Q24 revenue," Wurster said. "Strong client engagement, increased margin utilization, encouraging client cash trends, and record net inflows into our Managed Investing Solutions helped lift 4Q24 revenue to $5.3 billion – an increase of 20% year-over-year."



Schwab plans to add more than a dozen branches in 2025 and relocate some of its 400-plus existing locations to take advantage of where customers have been moving and which Main Streets and neighborhoods see more foot traffic. The company's focus on expanding its physical presence, combined with its strong performance in managed investing solutions, positions Schwab well for continued growth in the coming years.

In conclusion, Charles Schwab's strong fourth-quarter results and record inflows into its managed investing solutions have driven the company's stock price higher. With a strategic focus on expanding its managed investing offerings and branch network, Schwab is well-positioned to continue its growth trajectory in the long term. Investors looking for exposure to the growing demand for managed investing solutions and the expanding financial services sector may want to consider adding Charles Schwab to their portfolios.