Financial Survey: Charles Schwab (NYSE:SCHW) & Sound Point Meridian Capital (NYSE:SPMC)

Sound Point Meridian Capital (NYSE:SPMC) and Charles Schwab (NYSE:SCHW) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, analyst recommendations, valuation, institutional ownership, dividends and profitability.

Insider and Institutional Ownership

84.4% of Charles Schwab shares are held by institutional investors. 0.9% of Sound Point Meridian Capital shares are held by company insiders. Comparatively, 6.3% of Charles Schwab shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Risk and Volatility

Sound Point Meridian Capital has a beta of 1.39, suggesting that its stock price is 39% more volatile than the S&P 500. Comparatively, Charles Schwab has a beta of 0.77, suggesting that its stock price is 23% less volatile than the S&P 500.

Valuation and Earnings

This table compares Sound Point Meridian Capital and Charles Schwab”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sound Point Meridian Capital	$72.51 million	1.67	-$118.49 million	($5.78)	-1.02
Charles Schwab	$27.06 billion	5.85	$8.85 billion	$5.86	15.62

Charles Schwab has higher revenue and earnings than Sound Point Meridian Capital. Sound Point Meridian Capital is trading at a lower price-to-earnings ratio than Charles Schwab, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Sound Point Meridian Capital and Charles Schwab’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sound Point Meridian Capital	N/A	N/A	N/A
Charles Schwab	39.33%	25.79%	2.22%

Analyst Ratings

This is a breakdown of recent recommendations for Sound Point Meridian Capital and Charles Schwab, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sound Point Meridian Capital	0	2	1	1	2.75
Charles Schwab	1	5	18	0	2.71

Sound Point Meridian Capital presently has a consensus price target of $15.12, suggesting a potential upside of 156.62%. Charles Schwab has a consensus price target of $119.91, suggesting a potential upside of 30.97%. Given Sound Point Meridian Capital’s stronger consensus rating and higher possible upside, equities analysts plainly believe Sound Point Meridian Capital is more favorable than Charles Schwab.

Dividends

Sound Point Meridian Capital pays an annual dividend of $1.56 per share and has a dividend yield of 26.5%. Charles Schwab pays an annual dividend of $1.28 per share and has a dividend yield of 1.4%. Sound Point Meridian Capital pays out -27.0% of its earnings in the form of a dividend. Charles Schwab pays out 21.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Charles Schwab has raised its dividend for 1 consecutive years. Sound Point Meridian Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Charles Schwab beats Sound Point Meridian Capital on 12 of the 18 factors compared between the two stocks.

About Sound Point Meridian Capital

Sound Point Meridian Capital Inc. is an externally managed, non-diversified closed-end management investment company. Its investment objective is to generate high current income, with a secondary objective to generate capital appreciation, by investing primarily in third-party collateralized loan obligation equity and mezzanine tranches. Sound Point Meridian Capital Inc. is based in NEW YORK.

About Charles Schwab

The Charles Schwab Corporation, together with its subsidiaries, operates as a savings and loan holding company that provides wealth management, securities brokerage, banking, asset management, custody, and financial advisory services in the United States and internationally. The company operates in two segments, Investor Services and Advisor Services. It offers brokerage accounts with equity and fixed income trading, margin lending, options trading, futures and forex trading, and cash management capabilities, including certificates of deposit; third-party mutual funds through the Mutual Fund Marketplace and Mutual Fund OneSource service, as well as mutual fund trading and clearing services to broker-dealers; exchange-traded funds; advisory solutions for managed portfolios, separately managed accounts, customized personal advice for tailored portfolios, specialized planning, and full-time portfolio management; banking products comprising checking and savings accounts, first lien residential real estate mortgage loans, home equity lines of credit, and pledged asset lines; and trust custody services, personal trust reporting services, and administrative trustee services. It also provides digital retirement calculators; integrated web-, mobile-, and software-based trading platforms, real-time market data, options trading, premium research, and multi-channel access; self-service education and support tools; online research and analysis tools; equity compensation plan sponsors full-service recordkeeping for stock plans, stock options, restricted stock, performance shares, and stock appreciation rights; retirement plan services; mutual fund clearing services; and advisor services, including interactive tools and educational content. The Company operates through branch offices. The Charles Schwab Corporation was incorporated in 1971 and is headquartered in Westlake, Texas.