Schwab Earnings Top Forecasts as Investors Flock to Markets

Schwab earnings beat estimates as the broker benefits from retail investors flocking to rising stock markets.
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Shares of Charles Schwab  (SCHW) - Get Report rose Tuesday after the discount securities brokerage reported fourth-quarter earnings that beat expectations.

Retail investors continue to flock to financial markets to grab pieces of the pie -- the pie of rising markets. 

The number of households executing trades rose more than 50% from a year earlier.

Profit at the San Francisco company registered $1.14 billion, or 57 cents a share, compared with $852 million, or 62 cents, in the year-earlier quarter. 

Adjusted earnings per came in at 74 cents a share, up from 63 cents a year ago and beating the consensus estimate of 65 cents in a FactSet survey of analysts.

Revenue soared 60% from a year earlier to $4.18 billion, besting the analyst consensus of $4.11 billion.

Schwab shares recently traded at $58.96, up 0.4%. They have soared 76% in the six months through Friday.

Schwab CEO Walt Bettinger in a statement touted "record operating performance"  and completion of the largest brokerage acquisition in history, TD Ameritrade, during the fourth quarter.

"[Client] engagement with the financial markets rose to record levels -- pro-forma combined new-to-firm households increased more than 175% compared to 2019, with the number of households placing trades up more than 50% year-over-year,” Bettinger said. 

“Our clients also continued to set numerous single-day trading records, including a peak of 7.8 million trades on Nov. 9.”

Further, “the impact of covid-19, along with social and political turmoil, created an unprecedented combination of personal and macroeconomic challenges for our clients, employees and stockholders alike,” he said.