SCHWAB (CHARLES) CORP (NYSE:SCHW) Shows Strong Earnings Momentum and Bullish Technical Setup

For investors looking to join solid earnings momentum with positive chart patterns, a multi-layered screening method can be very useful. By selecting for stocks showing good technical condition, a forming price structure, and quickening fundamental growth, the aim is to find candidates ready for a possible breakout. This process matches with strategies such as CANSLIM, which focus on purchasing market leaders with strong earnings growth as they come out of forming bases. One stock now fitting this strict group of conditions is SCHWAB (CHARLES) CORP (NYSE:SCHW).

Fundamental Growth Momentum

The center of a high-growth momentum plan is finding companies with quickening business results. SCHW receives a High Growth Momentum Rating of 6, showing good basic trends across several important financial measures. The company is displaying notable earnings ability and operational gain.

• Earnings Per Share (EPS) Growth: The latest quarterly EPS increased a notable 70.1% versus the same quarter last year. This comes after earlier quarters of good growth at 56.2% and 40.5%, showing a continued positive direction.
• Profit Margin Expansion: A key signal of gaining efficiency, SCHW's profit margin has grown in sequence over the last four reported quarters, moving from 25.8% to 32.3% in the latest period.
• Estimate Revisions and Surprises: Analyst view is positive, with the average EPS estimate for the next fiscal year adjusted higher by almost 4% over the last three months. Also, SCHW has exceeded EPS estimates in all of the last four quarters, with an average beat of 3.5%.
• Sales and Free Cash Flow: While top-line revenue growth has been more steady, the latest quarter displayed a notable quickening to 26.6% year-over-year. In addition, free cash flow over the trailing twelve months has increased by 58.9%.

These items together form a view of a company not only expanding, but doing so with rising profitability and momentum that is being noted and valued by the market.

Technical Strength and Setup Quality

Good fundamentals are most effective when paired with a positive price direction. According to ChartMill's detailed technical report, SCHW shows very good technical condition with a rating of 9 out of 10. The stock is in a confirmed uptrend on both short-term and long-term periods and has done better than 80% of the market over the last year. Its relative strength inside the Capital Markets industry is especially significant, exceeding 84% of its peers.

Maybe more important for timing an entry, SCHW now shows a fair setup pattern, receiving a Setup Rating of 7. The stock has been forming its recent gains, trading in a set range over the last month. This time of sideways movement after a rise can form a possible base for the next move up.

• Key Technical Levels:
  • Resistance: A set zone is present between $97.08 and $98.69. A clear move above this area could indicate a breakout.
  • Support: Several support layers are noted below, with a main zone between $92.78 and $95.21, giving a reasonable area for a protective stop-loss order.

This pairing, a stock in a good uptrend taking a break to form a base, is exactly the kind of pattern growth momentum investors seek. It suggests institutional buying and gives a clear, risk-defined entry point if the forming period ends with upward movement.

A Meeting of Conditions

SCHWAB (CHARLES) CORP shows the kind of chance this screening process intends to reveal. The company is not only expanding; its earnings growth is quickening, its profitability is growing, and it is regularly beating expectations. This fundamental momentum supplies the "fuel" for a continued price rise. At the same time, the stock's price movement shows the "fire" is already burning, with a strong long-term uptrend now resting in a forming period. The setup gives a clear plan for entry and risk control, answering the important question of when to invest along with the why.

For investors wanting to find other stocks that fit these joined conditions of high growth momentum and technical breakout setups, you can view the live screen here.

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Disclaimer: This article is for information only and does not form investment advice, a suggestion, or an offer to buy or sell any security. The study is based on given data and shows conditions at a specific time. Investing includes risk, including the possible loss of principal. Always do your own research and think about talking with a qualified financial advisor before making any investment choices.