Negative Asset Growth for Schwab - Analyst Blog
16 Mayo 2011 - 1:37PM
Zacks
On Friday, Charles Schwab Corp. (SCHW) released
its Monthly Activity Report for April 2011, recording net outflows
of $0.5 billion in net new assets (including both new and existing
clients) as the customers withdrew money to pay income taxes. This
is the first time that the company has reported a net outflow since
June 2010.
However, Schwab’s client assets totaled $1.68 trillion at the
end of April, reflecting a growth of 2% from the prior month and
11% on a year-over-year basis. The hike was driven by an increase
in net market gains (due to rising markets), which was partially
offset by a decline in net new assets.
Schwab reported opening of 83,000 brokerage accounts in April
2011. This was higher than 82,000 registered in March but lower
than 89,000 recorded in April 2010. Schwab also reported a slow
down in trading activity in April. The company’s daily average
trades were 435,000 in April, flat with the prior month but down 1%
year over year.
At the end of April, Schwab’s clients’ active brokerage accounts
totaled 8.112 million, flat with the prior month but up 3% year
over year. Similarly, clients’ banking accounts stood at 728,000,
showing an increase of 1% sequentially and 18% year over year.
However, the number of corporate retirement plan participants
declined 1% from March 2011 and 2% from April 2010 to 1,436
million.
While Schwab’s focus on lower-cost capital structure will
sustain better results in the upcoming quarters, its financials
will continue to be affected by lower trading activities and
volatile interest rates. However, after the completion of the
acquisition of optionsXpress Holdings Inc. (OXPS)
in the third quarter of 2011, the company’s top line will benefit
from increased trading in derivatives. Also, capital spending
initiatives will augment further revenue growth.
Schwab currently retains a Zacks #3 Rank, which translates into
a short-term Hold rating. Also, considering the fundamentals, we
maintain a long-term Neutral recommendation on the stock.
OPTIONSXPRESS (OXPS): Free Stock Analysis Report
SCHWAB(CHAS) (SCHW): Free Stock Analysis Report
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