On May 30, 2014, we issued an updated research report on
). The company's better-than-expected results and increasing
trading activities will continue to support its financials.
However, sluggish economic recovery and a still low interest rate
environment make us apprehensive.
Schwab reported first-quarter results on Apr 15. Earnings of 24
cents per share surpassed the Zacks Consensus Estimate by 9.1% on
the back of increased revenues and almost stable operating
expenses, partially offset by lower benefit from provisions.
Additionally, Schwab continues to grow in its trading business. The
company's Daily Average Trades (DATs) are on the rise. This trend
is expected to continue, unless the pace of economic recovery
Further, following the earnings release, the Zacks Consensus
Estimate over the last 60 days has been revised upward. For 2014,
the Zacks Consensus Estimate climbed 2.1% to 97 cents per share,
while for 2015 it rose 1.7% to $1.18 per share.
On the flip side, elevated operating expenses remain a major
concern. Schwab continues to witness higher expenses resulting from
rise in costs related to compliance and compensations.
Also, low rates have been a drag on the top line, forcing Schwab to
waive the fees charged for managing funds. The company will face
revenue pressure until improvement in the interest rates
environment, which is not expected any time soon.
Presently, Schwab has a Zacks Rank #3 (Hold).
Stocks That Warrant a Look
Some better-ranked investment brokers include
Interactive Brokers Group, Inc.
Piper Jaffray Companies
). All these stocks sport a Zacks Rank #1 (Strong Buy).
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E TRADE FINL CP (ETFC): Free Stock Analysis
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