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Schwab's August DATs Witness Marginal Y/Y Decline - Analyst Blog

The Charles Schwab Corporation ( SCHW ) recorded Daily Average Trades (DATs) of 460,000 for Aug 2014, reflecting a decline of 1% from the prior-year month and remaining same as that of the prior month.

Total client assets summed $2.45 trillion, up 18% from Aug 2013 and 3% from the previous-month level. However, Schwab's net new assets - bought by existing as well as new clients - dropped 47% from the prior month to $8.5 billion.

Schwab opened 75,000 brokerage accounts, down 4% from both Aug 2013 and Jul 2014 levels. The company's active brokerage accounts amounted to 9.3 million, up 3% year over year but almost in line with the previous month.

Clients' banking accounts totaled 964,000, increasing 4% year over year and 1% from the prior month. On the other hand, Schwab had 1.38 million corporate retirement plan participants, up 7% year over year but almost in line with the prior month.

Decline in net new assets poses a worry for Schwab, despite a rise in DATs. Further, mixed performance during the reported month slightly shook investors' confidence in the stock.

Nevertheless, we believe that synergies from the acquisitions and a stable capital position will boost the company's financials to some extent in the upcoming quarters.

Despite several initiatives undertaken to reduce dependency on interest rates, Schwab's financials will likely remain pressurized due to a persistent low interest rate environment and sluggish economic recovery.

Currently, Schwab carries a Zacks Rank #2 (Buy). Some better-ranked investment managers include Arlington Asset Investment Corp. ( AI ), Moelis & Company ( MC ) and Piper Jaffrey Companies ( PJC ). All these stocks sport a Zacks Rank #1 (Strong Buy).

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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 Nasdaq, Inc.


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

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