Is Charles Schwab Corp (SCHW) overvalued?
On Equity Rank's model estimate, SCHW trades 24% above its fair value. Charles Schwab Corp (SCHW) last closed at $91.49; the multi-method model fair value is $73.59.
| Price | Model fair value | Price vs model |
|---|---|---|
| $91.49 | $73.59 | 24% above |
What the answer rests on
- 3 of 12 valuation methods put SCHW's value above its price and 9 put it below, so the methods mostly agree.
- To justify today's price, SCHW's free cash flow would need to grow about 2.6% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 100.6% a year.
- SCHW trades at 16.0 times its last year's earnings, against a median of 17.6 for 95 profitable Financials companies.
- Over the past year the price sat below the model fair value on 0% of trading days. The gap ranged from 21% above to 75% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind SCHW's fair value · What prices assume · Other companies