Schwab’s equity ratings: value added or old news?

Ray R. Sturm ()
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Ray R. Sturm: University of Central Florida

Journal of Economics and Finance, 2017, vol. 41, issue 2, No 3, 257-275

Abstract: Abstract Charles Schwab Inc. appears to expend a great deal of effort analyzing stocks from many perspectives and rating their potential for future returns over a 12-month investment horizon. This study examines whether their analysis explains returns beyond known variables. Schwab’s equity ratings are an interesting dataset to study because their ranking methodology appears to highly correlate with known academic research. Examining an original sample size of 3074 stocks and using the Year 2014 as a test sample, evidence is presented that Schwab’s ex-ante analysis does add explanatory value to ex-post returns, especially in the presence of firm Beta, firm size and a stock’s nearness to its 52-week high.

Keywords: Portfolio management; Efficient markets (search for similar items in EconPapers)
JEL-codes: G11 G19 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1007/s12197-015-9347-1

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