Charles Schwab Shares Decline After November Metrics
The stock value of Charles Schwab Company fell by 3.9% on Friday after the company's November metrics received various reactions from industry analysts. The financial services firm reported that core net new assets from both new and existing clients reached $28.8 billion, marking a 17% increase compared to the previous month. Additionally, Charles Schwab's total client assets rose by 4.6% to $10.31 trillion, while new brokerage accounts increased by 7.9% to 357,000.
The company revised its full-year net revenue growth forecast from the previously anticipated range of 2.0% to 3.0% in the October Fall Business Update to a range of 3.0% to 3.5%. This improved outlook is attributed to increased investor participation, a strengthening of the post-election stock market, and stabilization of customer transaction sweep cash balances.
Analysts at TD Cowen responded positively to the company's upgraded revenue guidance for the fiscal year 2024, indicating that the fourth-quarter estimate would be around $0.90, slightly above the consensus estimate. However, TD Cowen pointed out that asset flows and monthly cash accumulation did not meet expectations.
Citi analysts highlighted strong trading activity and margin balance growth, noting that the average sequential increase was approximately 4%. However, they emphasized that net new assets fell below projections and that a slowdown in trading activity is expected in December. Nevertheless, Citi anticipates upward pressure on consensus estimates based on quarter-over-quarter trends.
Keefe, Bruyette & Woods observed that cash balances remained relatively consistent with the previous month and noted a slight increase in net new assets compared to October, although this growth did not meet historical standards. The firm pointed to an expectation of modest unrealized cash growth.
JPMorgan analysts reported that customer transaction sweeps remained steady month-over-month, indicating that customer cash levels were stable. This situation is seen as a sign of Charles Schwab's continued ability to manage high-cost short-term borrowing.