Schwab's Trades Down in July - Analyst Blog


In its monthly market activity report for Jul 2013, The Charles Schwab Corporation ( SCHW ) reported Clients' Daily Average Trades of 498,900. The figure marked a 4% decline from 518,100 in the prior month but was up 26% from 396,100 in the year-ago month.

Total client assets were $2.12 trillion, improving 3% from Jun 2013 and 16% from Jul 2012. Further, Schwab's net new assets - bought by the new and existing clients - were $8.8 billion, compared with negative balance of $19.8 billion reported in the prior month and $7.4 billion in the year-ago month.

Schwab opened 75,000 new brokerage accounts in the reported month, increasing 9% from Jun 2013 and 21% from Jul 2012. The company's active brokerage accounts totaled 8.97 million, almost stable from the prior month and up 3% year over year.

Moreover, clients' banking accounts rose 1% over the prior month and 11% year over year to 918,000. Moreover, Schwab had 1.60 million corporate retirement plan participants, almost at par with the Jun 2013 level and rising 4% from Jul 2012.

Performances of Other Brokerage Firms

Along with Schwab, online brokerage firm E*TRADE Financial Corporation ( ETFC ) reported a decline in its Daily Average Revenue Trades (DARTs) for the month of Jul 2013. DARTs were 140,898, down 2% from Jun 2013, but up 10% on a year-over-year basis.

Last week, TD Ameritrade Holding Corporation ( AMTD ) reported a 6% fall in average client trades compared with the prior month in its Activity Report for the month of Jul 2013. However, average client trades surged 12% on a year-over-year basis to 373,000. Further, TD Ameritrade reported $544.2 billion in total client assets, up 21% year over year and 4% from the prior month.

Our Take

Schwab's low-cost capital structure will likely aid in improving results in the upcoming quarters. Moreover, the synergies from the acquisitions and stable capital position will boost the company's financials going forward. However, we remained concerned about the company's low trading activities and reduced interest rate yields.

Schwab currently carries a Zacks Rank #3 (Hold). Some better performing investment brokers include GAIN Capital Holdings, Inc. ( GCAP ), which has a Zacks Rank #1 (Strong Buy).

TD AMERITRADE (AMTD): Free Stock Analysis Report

E TRADE FINL CP (ETFC): Free Stock Analysis Report

GAIN CAP HLDGS (GCAP): 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 , ETFC , GCAP , SCHW

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