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Schwab Shares Rise on Q3 Earnings-and-Revenue Beat

Schwab's revenue soared 87% to $4.57 billion in the third quarter, beating the FactSet analyst consensus of $4.52 billion.

Charles Schwab  (SCHW) - Get Charles Schwab Corporation Report shares rose on Friday after the securities brokerage reported stronger-than-expected third-quarter results.

Net income shot up to $1.53 billion, or 74 cents a share, from $698 million, or 48 cents a share, in the year-earlier quarter. Adjusted profit totaled 84 cents a share, besting the consensus estimate of 81 cents derived from a FactSet survey of analysts.

Revenue soared 87% from a year earlier to $4.57 billion, beating the FactSet analyst consensus of $4.52 billion. 

Trading revenue quintupled as plenty of investors and speculators sought to win in financial markets.

Net interest revenue jumped 51% to $2.03 billion, almost hitting analysts’ forecast of $2.04 billion. 

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Trading revenue quintupled to $964 million. Analysts predicted $897.3 million.

Schwab recently traded at $80.19, up 2.7%, and has ascended 50% year to date amid the securities trading boom.

Prior to the earnings report, Morningstar analyst Michael Wong put fair value at $70 for Schwab, and he assigns it a wide moat.

“After the merger with TD Ameritrade, trading revenue has become more material and is about 20% of net revenue,” he wrote in August.

“While headline commissions are at $0, the company still charges for certain types of trades and receives payment for order flow from market makers. We believe recently high retail may crest over the next year.

"Client asset growth is the other major revenue lever for the firm. Approximately 30% of the company's net revenue is directly from asset management and administration fees. The company has been building out its investment management service offerings, such as ETFs…”