Schwab's May DATs Fall 12% Y/Y - Analyst Blog

The Charles Schwab Corporation SCHW recorded a decline in Daily Average Trades (DATs) for May 2014. Per its monthly market activity report, the company charted DATs of 445,700, marking a decline of 12% from the prior-year month and 17% from the previous month.

However, total client assets were $2.35 trillion, up 12% from May 2013 and 2% from Apr 2014. Schwab's net new assets – bought by existing as well as new clients – were $10.9 billion, compared with an asset outflow of $1.9 billion in May 2013 and up significantly from $0.3 billion in Apr 2014.

Schwab opened 71,000 brokerage accounts, down 9% from May 2013 and 25% from Apr 2014. The company's active brokerage accounts totaled 9.2 million, up 3% year over year and almost flat compared with the prior month.

Clients' banking accounts were 944,000, increasing 5% year over year and 1% from the prior month. Moreover, Schwab had 1.35 million corporate retirement plan participants, down 16% from May 2013 but almost in line with Apr 2014 level.

Though Schwab witnessed a decline in DATs during the reported month, a consistent rise in net new assets remains its strength. This was reflected in the company's stock price movement which gained 1.6% during the trading session on Friday and closed at $26.01.

Further, Schwab is well positioned to benefit from the overall volatility in the equity market. Therefore, going forward we anticipate healthy inflows to continue supporting top-line growth.

Nevertheless, despite the positives, sluggish economic recovery, elevated expenses and a still low interest rate environment make us apprehensive. Hence, currently Schwab carries a Zacks Rank #3 (Hold).

Among other investment brokers, TD Ameritrade Holding Corp.'s AMTD average client trades per day were 383,000, falling 8% year over year and 15% from the preceding month.

For Interactive Brokers Group, Inc.'s IBKR total customer DARTs were 518,000, up 2% from May 2013 but down 10% from Apr 2014. Moreover, E*TRADE Financial Corporation's ETFC DARTs were 147,661, down 9% from May 2013 and14% from Apr 2014.