Schwab’s Monthly Metrics Improved In October
In continuation with a generally strong performance in the first three quarters of the year, Charles Schwab‘s (NYSE:SCHW) growth trend continued as the brokerage saw significant improvement across its key metrics in October. Interest earning assets, which generate over 45% of Schwab’s revenues, continued their strong growth (around 8% year over year). This surge has likely been driven by both the rate hikes over the past few months and the anticipation of further hikes in the year ahead. The Fed’s guidance on a possible hike in the near term is likely to propel earnings from this segment.
There has been increased demand among customers for expert asset management advice, and Schwab’s continued efforts are providing actionable insights and capitalizing on the company’s digital advisory strength. This has propelled growth in assets under management. The company’s focus on innovation in customer-centric financial products and personal guidance to customers is likely to increase revenues from the segment.
Meanwhile, trading revenues have been some pressure as brokerages have been forced to slash commissions in response to heightened competition. However, this revenue pressure should be largely offset by growth in trading volumes.
Our price estimate for Charles Schwab’s stock stands at $42, which is slightly below the market price.
See our complete analysis for Charles Schwab.
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