We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Schwab (SCHW) Q3 Earnings Beat on Higher Revenues, Costs Up
Read MoreHide Full Article
Charles Schwab’s (SCHW - Free Report) third-quarter 2018 earnings of 65 cents per share beat the Zacks Consensus Estimate by a penny. Also, earnings surged 55% from the prior-year quarter.
Schwab’s shares were up nearly 1% in pre-market trading. Notably, price reaction during the full trading session will provide a better idea about how investors accepted the results.
Revenue growth (driven by a rise in interest income and trading revenues) and absence of fee waivers drove the results. Further, the quarter witnessed an impressive rise in total client assets and new brokerage accounts. However, higher expenses remained a concern.
Net income available to common shareholders was $885 million, jumping 53.9% year over year.
Revenue Growth Offset by Rise in Expense
Net revenues were $2.58 billion, up 18.9% year over year. The rise was supported by net interest revenues (up 41.7%) and trading revenues (up 16.6%), partially offset by 5.6% decline in other revenues and 6% fall in asset management and administration fees. The reported figure marginally missed the Zacks Consensus Estimate of $2.59 billion.
Total non-interest expenses increased 11.5% year over year to $1.36 billion. All expense components increased on a year-over-year basis.
Fee waivers were nil in the reported quarter against $1 million recorded a year ago.
Pre-tax profit margin improved to 47.3% from 43.6% recorded last year.
At the end of the third quarter, Schwab’s average interest-earning assets grew 20.5% year over year to $258.3 billion.
Annualized return on equity as of Sep 30, 2018, came in at 20%, up from 15% in the year-ago quarter.
Other Business Developments
As of Sep 30, 2018, Schwab had total client assets of $3.56 trillion (up 12% year over year). Also, net new assets — brought by new and existing clients — were $53.5 billion, up 4% from the prior-year quarter.
Schwab added 369,000 new brokerage accounts in the reported quarter. As of Sep 30, 2018, the company had 11.4 million active brokerage accounts, 1.3 million banking accounts and 1.6 million corporate retirement plan participants.
Our Take
Focus on low-cost capital structure will continue to support Schwab’s performance in the quarters ahead. Also, initiatives to strengthen market share will likely support its profitability over the long term, despite the expectation of near-term reduction in trading revenues. However, continuous rise in expenses (due to rise in compensation costs) is expected to hurt the bottom line.
The Charles Schwab Corporation Price, Consensus and EPS Surprise
Earnings Release Dates of Other Investment Brokers
We now look forward to E*TRADE Financial Corp. , TD Ameritrade Holding Corp. (AMTD - Free Report) and Raymond James Financial, Inc. (RJF - Free Report) , scheduled to report results on Oct 18, Oct 22 and Oct 24, respectively.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Schwab (SCHW) Q3 Earnings Beat on Higher Revenues, Costs Up
Charles Schwab’s (SCHW - Free Report) third-quarter 2018 earnings of 65 cents per share beat the Zacks Consensus Estimate by a penny. Also, earnings surged 55% from the prior-year quarter.
Schwab’s shares were up nearly 1% in pre-market trading. Notably, price reaction during the full trading session will provide a better idea about how investors accepted the results.
Revenue growth (driven by a rise in interest income and trading revenues) and absence of fee waivers drove the results. Further, the quarter witnessed an impressive rise in total client assets and new brokerage accounts. However, higher expenses remained a concern.
Net income available to common shareholders was $885 million, jumping 53.9% year over year.
Revenue Growth Offset by Rise in Expense
Net revenues were $2.58 billion, up 18.9% year over year. The rise was supported by net interest revenues (up 41.7%) and trading revenues (up 16.6%), partially offset by 5.6% decline in other revenues and 6% fall in asset management and administration fees. The reported figure marginally missed the Zacks Consensus Estimate of $2.59 billion.
Total non-interest expenses increased 11.5% year over year to $1.36 billion. All expense components increased on a year-over-year basis.
Fee waivers were nil in the reported quarter against $1 million recorded a year ago.
Pre-tax profit margin improved to 47.3% from 43.6% recorded last year.
At the end of the third quarter, Schwab’s average interest-earning assets grew 20.5% year over year to $258.3 billion.
Annualized return on equity as of Sep 30, 2018, came in at 20%, up from 15% in the year-ago quarter.
Other Business Developments
As of Sep 30, 2018, Schwab had total client assets of $3.56 trillion (up 12% year over year). Also, net new assets — brought by new and existing clients — were $53.5 billion, up 4% from the prior-year quarter.
Schwab added 369,000 new brokerage accounts in the reported quarter. As of Sep 30, 2018, the company had 11.4 million active brokerage accounts, 1.3 million banking accounts and 1.6 million corporate retirement plan participants.
Our Take
Focus on low-cost capital structure will continue to support Schwab’s performance in the quarters ahead. Also, initiatives to strengthen market share will likely support its profitability over the long term, despite the expectation of near-term reduction in trading revenues. However, continuous rise in expenses (due to rise in compensation costs) is expected to hurt the bottom line.
The Charles Schwab Corporation Price, Consensus and EPS Surprise
The Charles Schwab Corporation Price, Consensus and EPS Surprise | The Charles Schwab Corporation Quote
Currently, Schwab carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Release Dates of Other Investment Brokers
We now look forward to E*TRADE Financial Corp. , TD Ameritrade Holding Corp. (AMTD - Free Report) and Raymond James Financial, Inc. (RJF - Free Report) , scheduled to report results on Oct 18, Oct 22 and Oct 24, respectively.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>