By Ben Levisohn
MarketWatch has the details:
Overall, Schwab reported a profit of $290 million, up from $247 million. On a per-share basis, which includes preferred dividend payments, earnings were up at 22 cents from 19 cents. Revenue grew 15% to $1.37 billion.
Analysts polled by Thomson Reuters were recently forecasting for a per-share profit of 20 cents on $1.34 billion in revenue.
Citigroup’s William Katz calls it a “solid..beat.” He writes:
We view the release favorably as: 1) SCHW beat despite higher than forecast rise in money market fee waivers; 2) unlike 2Q13, SCHW generated solid operating leverage, with better than forecast revenues/margins and ROE; 3) the [net-inteerst marging] held steady Q/Q; 4) trading activity was also steady Q/Q despite typical adverse seasonality ‒ with September generating solid asset gathering and inline trading; and, 5) management affirmed 2013/2014 key fiscal guidance metrics – all of which supports our notion that: a) EPS have troughed (absent exogenous market shock[s]); and, b) stock is likely to trend higher (beyond ST market/rate vagaries). Today’s results also likely hurt recent negative bear case argument.
Sterne Agee’s Jason Weyeneth and Alex Levine like what they see but worry about the price:
SCHW reported 3Q13 results ahead of expectations driven by stronger interest income and well controlled expenses. We remain cautious on the stock given a stretched valuation despite the leverage to higher rates (particularly short rates) and substantial long-term upside.
Schwab trades at 15.5 times earnings, according to FactSet.
Shares of Schwab have gained 6.5% to $23.45 at 10:20 a.m. today, and have given a lift to other discount brokers. TD Ameritrade (AMTD) has risen 3% to $27.81, E*Trade Financial (ETFC) has ticked up 0.2% to $16.96, Interactive Brokers (IBKR) has advanced 0.7% to $19.69. LPL Financial (LPLA) has dropped 1.5% to $11.47