How Could Brexit Impact Schwab’s Stock In The Near Term?
The U.K.’s decision to exit the European Union will likely have profound effects on the U.S. economy. It could prompt the Federal Reserve to delay further interest rate hikes, with futures traders assigning a minimal chance of a rate hike in July or September, and just a moderate chance of a hike by year-end.
These potential developments could have a substantial impact on the financial services sector in the U.S. Following the Brexit vote, Charles Schwab’s stock fell by almost 20%. The sentiment is in line with the expectation of a delayed rate hike, as lower yields would likely suppress brokerages’ net interest income. Interest earning asset balances, in turn, may be negatively affected due to the higher opportunity cost of holding money in financial institutions. As a result, there could be a 13% downside to our price estimate for Schwab if rate hikes are significantly delayed.
Have more questions about E-Trade Financial? See the links below:
- What’s E-Trade’s Revenue And EBITDA Breakdown In Terms Of Different Operating Segments?
- How Has E-Trade’s Revenue Composition Changed Over The Past 5 Years?
- By How Much Has E-Trade’s Revenue & EBITDA Grown In The Last Five Years?
- How did E-Trade’s EBITDA Decline Outpace Revenue Decline In 2015?
- How Is E-Trade Expected To Grow In The Next Five Years?
Notes:
1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for E-Trade
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