Schwab Reports Y/Y Rise in DARTs - Analyst Blog


On Monday, Charles Schwab Corp. ( SCHW ) 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.

Peer Performance

Last week, TD Ameritrade Holding Corporation ( AMTD ) 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.

Our Viewpoint

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 Report
SCHWAB(CHAS) (SCHW): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: AMTD , SCHW

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