Summary
- Charles Schwab has lost about 30% of its market value since the failure of SBV.
- With that said, the brokerage has substantial liquidity and is seeing deposit growth.
- The fact that deposits are growing flies in the face of market concerns about Schwab’s liquidity.
- The stock is too cheap to miss.
Charles Schwab Corporation (NYSE:SCHW) has taken a significant valuation hit since the outbreak of the latest U.S. bank crisis last month, despite the fact that the financial firm was not directly impacted.
While the failure of SVB and other banks has caused renewed panic in the banking sector, Charles Schwab is well-funded and should not have experienced the valuation decline that it did.
Since the failure of Silicon Valley Bank, Charles Schwab’s market value has dropped by approximately 30%, and the company is now very attractively valued.
I believe the market is mistaken in giving Charles Schwab a 13x earnings multiple, and given the company’s access to substantial liquidity and deposit growth, I believe the stock is a steal.
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