In its monthly market activity report for November 2012, The Charles Schwab Corporation ( SCHW - Analyst Report ) reported Daily Average Revenue Trades (DARTs) of 431,800, almost at par with the prior month, but down 2% from the prior-year month. This implies that the company witnessed insufficient trading activity during the month. Further, weather-related market closures for two days impacted the trading activity in November.

Schwab’s net new assets bought by the new and existing clients totaled $16.2 billion, surging significantly from November 2011, but plunging 34% from October 2012. Also, this included a $5.4 billion inflow related to a mutual fund clearing services client along with a $0.9 billion outflow associated with a strategic transfer from Corporate Brokerage Services. Further, total client assets stood at $1.92 trillion, improving 15% from November 2011 and 1% from October 2012.

Schwab opened 70,000 brokerage accounts in the reported month, climbing 9% from November 2011 but down 5% from October 2012. The company’s active brokerage accounts totaled 8.75 million, up 2% year over year and almost flat compared with the prior-month.

Moreover, clients’ banking accounts augmented 10% year over year and 1% over the prior-month to 857,000. Moreover, the number of corporate retirement plan participants was 1,560 million, improving 6% from November 2011 but stable compared to October 2012.

Peer Performances

Last week, TD Ameritrade Holding Corporation ( AMTD - Analyst Report ) – an online brokerage firm – reported a 3% rise in average U.S. trades in its Activity Report for the month of November. However, the U.S. trades declined 10% on a year-over-year basis.

For the reported month, Daily Average Revenue Trades (DARTs) were 341,000, up from 330,000 recorded in the prior month. The rise in DARTs was largely resulted from the improvement in the equity markets.

Conclusion

Lower trading activities and fluctuating interest rates are expected to continuously impact the company’s financials in the near term. Further, we remain concerned about the company’s low capital intensity relative to its peers. However, its focus on low-cost capital structure will help it sustain better results in the upcoming quarters.

Schwab currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.