Information and delivery services provider
DST Systems Inc.
) recently sealed a multi-year deal with San Francisco-based
brokerage firm Charles Schwab & Co. Inc. The firm is a
Charles Schwab Corp.
). Financial terms of the deal were not disclosed.
Charles Schwab provides financial services (securities brokerage,
banking, money management and financial advisory services) to
individual investors and independent investment advisors. It
manages 8.8 million active brokerage accounts, 1.6 million
corporate retirement plan participants, 874,000 banking accounts,
and $2.01 trillion in client assets as of Jan 31, 2013.
DST will be responsible for managing, printing and delivering
investment-related documents, as well as bank and tax statements.
Also, DST will help Charles Schwab in producing electronic
statements and their efficient distribution to its clients. DST's
services will be provided by its Customer Communications segment.
Winning the deal was not easy for DST and it had to prove the
benefits of its services for the brokerage house. Contended by
DST's presentation and realizing its cost effectiveness, Charles
Schwab opted for the Customer Communications solutions.
DST's Customer Communications Segment helps businesses to improve
operational performances across sales, marketing, customer
service, technology, finance, operations and compliance. The
segment offers digital print, electronic solutions, direct
marketing and on-line marketing services.
The Customer Communications segment was formerly known as Output
Solutions but was renamed during the fourth quarter 2012 results
to reflect its product offerings more appropriately (previously
the segment used to deal in physical output solutions, but now
offers data management and insight, electronic and physical
communication). DST also acquired Newkirk Products, Inc. in May
2011 to expand its operations in North America.
We see a lot of potential for the Customer Communications
segment due to its association with Charles Schwab as its success
with the output solutions could fetch similar deals, going
DST's fourth quarter performance was encouraging with the top and
bottom lines surpassing the Zacks Consensus Estimates. We are
bullish on the stock due to its continuous share buybacks,
accretions from the acquisitions, improving trend in businesses
and wide exposure in the insurance vertical.
Currently, DST has a Zacks Rank #2 (Buy). Investors should also
look for similar stocks such as
Pervasive Software Inc.
), which carry a Zacks Rank #1 (Strong Buy) and are worth
DST SYSTEMS (DST): Free Stock Analysis Report
PEGASYSTEMS INC (PEGA): Free Stock Analysis
PERVASIVE SOFTW (PVSW): Free Stock Analysis
SCHWAB(CHAS) (SCHW): Free Stock Analysis
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