On Mar 8, 2013, we reiterated our long-term recommendation on
The Charles Schwab Corporation
) at Neutral. This reflects the company's fourth-quarter results,
which were in line with the Zacks Consensus Estimate.
EVERCORE PARTNR (EVR): Free Stock Analysis
PIPER JAFFRAY (PJC): Free Stock Analysis
SCHWAB(CHAS) (SCHW): Free Stock Analysis
SWS GROUP INC (SWS): Free Stock Analysis
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Schwab's fourth-quarter earnings came in at 15 cents per share,
at par with the Zacks Consensus Estimate. Growth in net interest
revenue, lower provision for loan losses and balance sheet
restructuring actions were the positives for the quarter. Yet,
higher operating expenses as well as a fall in trading revenue
dented the results.
Following fourth-quarter results, the Zacks Consensus Estimate
for 2013 has gone up by a penny to 75 cents per share. The Zacks
Consensus Estimate for 2014 has also advanced (up 3.6% to 87
cents per share). With the Zacks Consensus Estimates for both
2013 and 2014 increasing, the company now has a Zacks Rank #2
The key reason behind Schwab's stable earnings is diversified
revenue streams. Also, earnings continue to benefit from
management's aggressive efforts to increase clients in advisory
solutions. Further, the company has been making efforts to become
less dependent on interest rates.
However, low rates have been a drag on top line, forcing Schwab
to waive fees, which it charges its clients for managing funds.
Until the economic recovery gains momentum and interest rates
increase significantly, the company will continue to experience a
pressure on its revenue.
Other Major Investment Brokers Worth Considering
While we prefer Schwab, other stocks in the same industry that
are worth a look include
Evercore Partners Inc.
Piper Jaffray Companies
SWS Group, Inc.
). All these carry a Zacks Rank #1 (Strong Buy).