Charles Schwab Q2 Profit Plummets 31% on Lower Revenue and Charges (SCHW)

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Investment banker The Charles Schwab Corporation (SCHW) said Thursday that its second quarter profit fell 31% from last year, hurt by lower revenue and one-time charges.

The San Francisco-based company reported second quarter net income of $205 million, or 18 cents per share, compared with $295 million, or 26 cents per share, in the year-ago period.

Revenue plunged 17% from last year to $1.09 billion.

On average, Wall Street analysts expected a matching profit of 18 cents per share on slightly lower revenue of $1.08 billion.

Analysts, who typically exclude one-time items in their estimates, had expected a profit of 18 cents per share, according to a poll by Thomson Reuters.

Schwab said that its total client asset fell 12% to $1.22 trillion, but that trading revenue rose 18% in the quarter to $272 million. This gain was offset by lower asset management and administration fees, which declined by 21%.

The company still plans to reduce 2009 expenses by 7% to 8%. The company has moved its headquarters into lower-cost space, and slashed 600 jobs in the first quarter of this year.

Charles Schwab shares fell 47 cents, or -2.6%, in afternoon trading Thursday.

The Bottom Line
We had removed shares of SCHW from our “Recommended” list back on Sept.15, when the shares traded at $22.70. The company has a dividend yield of 1.30%, based on last night’s closing stock price of $18.09. The stock does have technical support in the $14-16 price area. If the shares can stabilize and resume its recent momentum, we see overhead resistance around the $19-21 price levels. We would remain on the sidelines for now.

The Charles Schwab Corporation (SCHW) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.1 out of 5 stars.

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