Charles Schwab Corp.
) released its Monthly Activity Report for April 2012. The company
recorded an increase of 5% in Daily Average Revenue Trades (DARTs)
from April 2011 to 458,900. However, the company's DARTs slipped 1%
from the prior month.
The year-over-year rise in Schwab's DARTs was mainly
attributable to its recent acquisition of optionsXpress. However,
the fall in DARTs from the previous month was largely a result of
uncertain economic recovery and investors' reluctance to invest in
the equity markets.
Schwab registered a rise in new assets, with net inflow of $1.0
billion in April 2012 as against a net outflow of $0.5 billion in
April 2011. However, the new assets significantly declined from
$10.5 billion recorded in March 2012.
Further, Schwab's total client assets stood at $1.83 trillion as
of April-end, rising 9% from $1.68 trillion in the prior-year month
and at par with the prior month. The company opened 87,000
brokerage accounts in April 2012, climbing 5% from 83,000 in April
2011, but slipping 3% from 90,000 in March 2012.
At the end of the reported month, Schwab's active brokerage
accounts totaled 8.684 million, up 7% year over year and 1%
sequentially. Moreover, clients' banking accounts grew 11% year
over year and 1% sequentially to 808,000 in April. Similarly, the
number of corporate retirement plan participants was 1,526 million,
improving 6% from April 2011 and 1% from March 2012.
TD Ameritrade Holding Corporation
) recorded 8% year-over-year and 3% sequential fall in DARTs for
April 2012 to 368,000. However, TD Ameritrade announced $450.9
billion of total client assets for April-end, up 7% from April 2011
and in line with March 2012.
We believe that the recent acquisitions will boost the company's
top line to some extent, leading to overall growth. While its focus
on low-cost capital structure will help sustain better results in
the upcoming quarters, the company's financials will continue to be
impacted by lower trading activities and volatile interest rates.
Moreover, we remain concerned about the company's low capital
intensity relative to its peers.
Schwab currently retains a Zacks # 2 Rank, which translates into
a short-term 'Buy' rating. Also, considering the fundamentals, we
maintain a long-term "Outperform" recommendation on the stock.
TD AMERITRADE (AMTD): Free Stock Analysis
SCHWAB(CHAS) (SCHW): Free Stock Analysis Report
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