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Will Higher Client Activity Aid Schwab (SCHW) in Q1 Earnings?
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Charles Schwab (SCHW - Free Report) is scheduled to report first-quarter 2020 results on Apr 15, before market open. Its revenues and earnings are likely to have declined in the quarter on a year-over-year basis.
In the last reported quarter, the company’s earnings lagged the Zacks Consensus Estimate. Lower revenues and a slight rise in expenses hurt the results.
Schwab has a decent earnings surprise history. Its earnings have surpassed the Zacks Consensus Estimate in two and met in one of the trailing four quarters, with a positive surprise of 3.8%, on average.
The Charles Schwab Corporation Price and EPS Surprise
Activities of the company during the first quarter failed to encourage analysts to revise earnings estimates upward. Over the past 30 days, the Zacks Consensus Estimate for its earnings for the to-be-reported quarter has been unchanged at 64 cents. The figure indicates a decline of 7.3% from the year-ago reported number.
The Zacks Consensus Estimate for first-quarter sales is pegged at $2.62 billion, which suggests a 3.8% decline from the year-ago quarter’s reported figure.
Before we take a look at what our quantitative model predicts for the to-be-reported quarter, let’s check the factors that are likely to have impacted Schwab’s performance.
Key Factors to Note
While the performance of the overall equity markets has not been good during the first quarter, coronavirus outbreak-related concerns have resulted in an unexpected rise in market volatility along with an increase in client activity.
While the virus-related concerns have made investors wary of entering the markets, Schwab opened 167,000 new brokerage accounts in January, up 27% year over year, and 159,000 accounts in February, up 38% year over year.
Moreover, the Zacks Consensus Estimate for the company’s active brokerage accounts of 12,488 for the first quarter suggests an improvement of 5.9% from the previous year’s reported number.
Thus, driven by the rise in volatility along with increased client activity, Schwab’s trading revenues are expected to have improved in the quarter.
However, the company’s decision to reduce its U.S. stock, ETF and options online trading commissions to $0, effective October 2019, is expected to have negatively impacted revenues to some extent.
Schwab is expected to have witnessed a decent rise in total client assets and average interest-earning assets in the to-be-reported quarter.
The Zacks Consensus Estimate for total client assets for the first quarter is pegged at $3.6 trillion, indicating marginal growth from the previous year’s reported figure. Moreover, the consensus estimate for average interest-earning assets is pegged at $284 billion, which suggests growth of 3.6% year over year. Despite expected growth in assets, Schwab’s net interest revenues are not likely to have witnessed improvement in the quarter because of lower interest rates.
In fact, the Federal Reserve cut interest rates to near-zero in March to support the U.S. economy from coronavirus-induced slowdown. This is expected to have hurt the company’s interest revenues further.
Schwab’s operating expenses have remained elevated over the past few quarters. Moreover, because of continued regulatory spending as well as ongoing investments to drive operating efficiency, overall expenses are expected to have remained high in the first quarter.
What the Zacks Model Unveils
According to our quantitative model, chances of Schwab beating the Zacks Consensus Estimate in the first quarter are low. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better — which is required to be confident of an earnings surprise call.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Schwab is +0.52%.
Zacks Rank: The company currently carries a Zacks Rank #4 (Sell).
Stocks Worth a Look
Here are some finance stocks that you may want to consider as these have the right combination of elements to post an earnings beat in their upcoming releases, per our model.
The Earnings ESP for Carolina Financial Corporation is +1.43% and it carries a Zacks Rank of 3, currently. The company is expected to report quarterly numbers in the coming days.
SB ONE BANCORP is likely to report quarterly earnings soon. The company, which carries a Zacks Rank of 3 at present, has an Earnings ESP of +1.56%.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.5% per year.
These 7 were selected because of their superior potential for immediate breakout.
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Will Higher Client Activity Aid Schwab (SCHW) in Q1 Earnings?
Charles Schwab (SCHW - Free Report) is scheduled to report first-quarter 2020 results on Apr 15, before market open. Its revenues and earnings are likely to have declined in the quarter on a year-over-year basis.
In the last reported quarter, the company’s earnings lagged the Zacks Consensus Estimate. Lower revenues and a slight rise in expenses hurt the results.
Schwab has a decent earnings surprise history. Its earnings have surpassed the Zacks Consensus Estimate in two and met in one of the trailing four quarters, with a positive surprise of 3.8%, on average.
The Charles Schwab Corporation Price and EPS Surprise
The Charles Schwab Corporation price-eps-surprise | The Charles Schwab Corporation Quote
Activities of the company during the first quarter failed to encourage analysts to revise earnings estimates upward. Over the past 30 days, the Zacks Consensus Estimate for its earnings for the to-be-reported quarter has been unchanged at 64 cents. The figure indicates a decline of 7.3% from the year-ago reported number.
The Zacks Consensus Estimate for first-quarter sales is pegged at $2.62 billion, which suggests a 3.8% decline from the year-ago quarter’s reported figure.
Before we take a look at what our quantitative model predicts for the to-be-reported quarter, let’s check the factors that are likely to have impacted Schwab’s performance.
Key Factors to Note
While the performance of the overall equity markets has not been good during the first quarter, coronavirus outbreak-related concerns have resulted in an unexpected rise in market volatility along with an increase in client activity.
While the virus-related concerns have made investors wary of entering the markets, Schwab opened 167,000 new brokerage accounts in January, up 27% year over year, and 159,000 accounts in February, up 38% year over year.
Moreover, the Zacks Consensus Estimate for the company’s active brokerage accounts of 12,488 for the first quarter suggests an improvement of 5.9% from the previous year’s reported number.
Thus, driven by the rise in volatility along with increased client activity, Schwab’s trading revenues are expected to have improved in the quarter.
However, the company’s decision to reduce its U.S. stock, ETF and options online trading commissions to $0, effective October 2019, is expected to have negatively impacted revenues to some extent.
Schwab is expected to have witnessed a decent rise in total client assets and average interest-earning assets in the to-be-reported quarter.
The Zacks Consensus Estimate for total client assets for the first quarter is pegged at $3.6 trillion, indicating marginal growth from the previous year’s reported figure. Moreover, the consensus estimate for average interest-earning assets is pegged at $284 billion, which suggests growth of 3.6% year over year. Despite expected growth in assets, Schwab’s net interest revenues are not likely to have witnessed improvement in the quarter because of lower interest rates.
In fact, the Federal Reserve cut interest rates to near-zero in March to support the U.S. economy from coronavirus-induced slowdown. This is expected to have hurt the company’s interest revenues further.
Schwab’s operating expenses have remained elevated over the past few quarters. Moreover, because of continued regulatory spending as well as ongoing investments to drive operating efficiency, overall expenses are expected to have remained high in the first quarter.
What the Zacks Model Unveils
According to our quantitative model, chances of Schwab beating the Zacks Consensus Estimate in the first quarter are low. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better — which is required to be confident of an earnings surprise call.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Schwab is +0.52%.
Zacks Rank: The company currently carries a Zacks Rank #4 (Sell).
Stocks Worth a Look
Here are some finance stocks that you may want to consider as these have the right combination of elements to post an earnings beat in their upcoming releases, per our model.
BCB Bancorp, Inc. (NJ) (BCBP - Free Report) is expected to release quarterly results soon. The company has an Earnings ESP of +4.17% and currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Earnings ESP for Carolina Financial Corporation is +1.43% and it carries a Zacks Rank of 3, currently. The company is expected to report quarterly numbers in the coming days.
SB ONE BANCORP is likely to report quarterly earnings soon. The company, which carries a Zacks Rank of 3 at present, has an Earnings ESP of +1.56%.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.5% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>