Schwab's April DATs Rise Y/Y


In its monthly market activity report for Apr 2013, The Charles Schwab Corporation (SCHW) reported Daily Average Trades (DATs) of 470,000. The DATs were up 2% from 458,900 in the year-ago month but down 3% from 486,000 in the prior month.

Total client assets stood at $2.11 trillion, improving 15% from Apr 2012 and 1% from Mar 2013. However, Schwab’s net new assets – bought by the new and existing clients – totaled $22 million, substantially lower than $1 billion reported in the year-ago month and $13 billion in the prior month. Also, this included a $7.3 billion outflow and $2.6 billion inflow related to mutual fund clearing services client.

Schwab opened 96,000 new brokerage accounts in the reported month, 10% higher than the Apr 2012 level and 17% higher than Mar 2013 level. The company’s active brokerage accounts totaled 8.91 million, up 3% year over year and 1% sequentially.

Moreover, clients’ banking accounts elevated 11% year over year to 895,000 and inched up 1% over the prior-month. Also, the company had 1.59 million corporate retirement plan participants, improving 5% from Feb 2012 and 1% from Mar 2013.

The rising DATs and new brokerage accounts are expected to be beneficial for Schwab. Yet, fluctuating interest rates and lower trading activities are anticipated to adversely affect the company’s financials going forward.

Moreover, Schwab’s capital intensity in comparison with other investment brokers remains a matter of concern. However, its focus on low-cost capital is expected to help the company achieve better results in the subsequent quarters.

Schwab currently carries a Zacks Rank #3 (Hold). Investment brokers that are worth considering include LPL Financial Holdings Inc. (LPLA), GAIN Capital Holdings, Inc. (GCAP) and Piper Jaffray Companies (PJC). LPL Financial carries a Zacks Rank #1 (Strong Buy), while GAIN Capital and Piper Jaffrey hold a Zacks Rank #2 (Buy).

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