Schwab's February DARTs Rise

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SymbolPriceChange
ETFC21.04+0.20
SCHW27.04+0.20
AMTD31.78+0.49
EVR51.85+0.85

In its monthly market activity report for Feb 2013, The Charles Schwab Corporation (SCHW) reported Daily Average Revenue Trades (DARTs) of 506,100. The DARTs were up 0.3% from 504,700 in the prior month and 1% from 500,100 in the year-ago month.

Schwab’s net new assets – bought by the new and existing clients – totaled $18.3 billion, surging 51% from Jan 2013, but plunging 14% from Feb 2012. Also, this included an $8.1 billion inflow related to a mutual fund clearing services client. Further, total client assets stood at $2.04 trillion, improving 1% from Jan 2013 and 13% from Feb 2012.

Schwab opened 75,000 new brokerage accounts in the reported month, 14% less than Jan 2013 level and 1% lower than Feb 2012 level. The company’s active brokerage accounts totaled 8.84 million, almost flat compared with the prior-month and up 3% year over year.

Moreover, clients’ banking accounts inched up 1% over the prior-month and elevated 11% year over year to 881,000. Also, the number of corporate retirement plan participants was 1,557 million, almost at par with Jan 2013 and improving 3% from Feb 2012.

Unlike Schwab, two investment brokers – TD Ameritrade Holding Corporation (AMTD) and E*TRADE Financial Corporation (ETFC) – reported a decline in the DARTs for the month of Feb 2013. TD Ameritrade’s DARTs were marginally lower from Jan 2013 and 6% from Feb 2012. Similarly, E*TRADE’s DARTs fell 1% from the prior month and 10% from the prior-year month.

Amid the challenging economy, rising DARTs and new brokerage accounts will be beneficial for Schwab. Yet, 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 Schwab’s 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 Rank #3 (Hold). However, another investment broker, Evercore Partners Inc. (EVR) is more favorably placed and carries a Zacks Rank #1 (Strong Buy).
 

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