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Will Schwab (SCHW) be Able to Beat Q1 Earnings Estimates?

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The Charles Schwab Corporation (SCHW - Free Report) is scheduled to report first-quarter 2017 results on Apr 18, before the market opens.

This San Francisco-based investment broker’s fourth-quarter 2016 earnings were in line with the Zacks Consensus Estimate. Revenue growth, primarily driven by an increase in equity market volatility, lower level of fee waivers and the absence of provisions were among the positives. These were however offset by higher expenses.

Shares of Schwab gained more than 22% in the last six months, given the gradual improvement in operating environment and an improving interest rate scenario.

The Zacks Consensus Estimate for the current quarter remained unchanged at 37 cents per share in the last 30 days. However, the estimate reflects a year-over-year improvement of 26.2%. Also, the company has a decent earnings surprise history, as evident from the chart below:
 

Will Schwab be able to surpass estimates this time? Let’s see how things have shaped up for this announcement.

Factors to Impact Q1 Results

Uncertainty Should Drive Trading Revenue: As a result of the uncertainties related to Trump’s policies, the equity markets were moderately volatile during the first quarter. This should have helped Schwab’s trading volumes in the quarter. Moreover, the company opened 111,000 and 113,000 new brokerage accounts in January and February 2017, respectively, which indicates that investors were interested in entering the market.

Asset Growth Should Boost Net Interest Revenue: Schwab witnessed a rise in average interest-earning assets in January and February. These assets, along with improvement in the rate scenario, might have helped Schwab experience higher net interest revenue during the quarter.

Decline in Fee Waivers: Schwab has been witnessing a steady decline in fee waivers following the Fed’s rate hike in mid-Dec 2016. Moreover, the most recent rate hike in Mar 2017 should also help the company in further decreasing its fee waivers. This might have helped Schwab earn more in the quarter.

Earnings Whispers

Our proven model however doesn’t conclusively predict that Schwab will be able to beat the Zacks Consensus Estimate this time around. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #3 (Hold) or better for this to happen.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks ESP: The Earnings ESP for Schwab is 0.00%. This is because the Most Accurate estimate of 37 cents is in line with the Zacks Consensus Estimate.

Zacks Rank: Schwab’s Zacks Rank #3 increases the predictive power of ESP. But we also need to have a positive Earnings ESP to be confident of an earnings beat.

Stocks That Warrant a Look

Here are a few finance stocks that you may want to consider, as they have the right combination of elements to post an earnings beat this quarter, according to our model.

BancorpSouth, Inc. is slated to release results on Apr 19. It has an Earnings ESP of +2.63% and carries a Zacks Rank #3.

Zions Bancorporation (ZION - Free Report) has an Earnings ESP of +1.85% and carries a Zacks Rank #3. The company is slated to release results on Apr 24.

Lazard Ltd (LAZ - Free Report) is scheduled to report results on Apr 27. It has an Earnings ESP of +11.27% and carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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