The Charles Schwab Corporation

(New York Stock Exchange)
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Bullish +65

2 Brokerage Stocks to Buy Before Their October Earnings Reports

Customer growth Earnings report AI-generated analysis

πŸ“ˆ Charles Schwab recorded $64.8 billion in core net new assets for August, a 46% year-over-year increase.

πŸ’° The firm achieved record Q2 revenue of $7.1 billion with adjusted non-GAAP EPS rising 42% to $1.62.

πŸ“‰ Daily trading volume cooled in August to 9.8 million, down from the second quarter's record of 11.9 million.

πŸ’΅ Schwab trades at roughly 12 times next year's expected earnings, offering a lower valuation than peers.

πŸ—“οΈ The company is scheduled to release its third-quarter business update webcast in mid-October.

πŸ“Š Pre-tax profit margins expanded from 50.1% to 54.3% in the second quarter.

Bullish Signals
  • Charles Schwab brought in a record $64.8 billion of new money in August, up 46% from the prior year.
  • The firm achieved record Q2 revenue of $7.1 billion with adjusted non-GAAP earnings per share rising 42% to $1.62.
  • Schwab's adjusted pre-tax profit margin expanded significantly from 50.1% to 54.3% in the second quarter.
  • Active brokerage accounts grew by 6% year-over-year, reaching a total of 40.1 million.
Risk Factors
  • Daily trading volume cooled in August to 9.8 million, falling below the second quarter's record high of 11.9 million.
  • Analysts warn that the recent slowdown in trading activity could weigh on third-quarter results.
Full Analysis
Charles Schwab (NYSE:SCHW) and Interactive Brokers are highlighted as brokerage stocks to consider before their upcoming October earnings reports. Schwab recently reported a record $64.8 billion in new client money for August, representing a 46% increase from the prior year, while its active accounts grew by 6% year-over-year. The company achieved record revenue of $7.1 billion in the second quarter, driven by strong asset inflows that are expected to continue into the third quarter. Schwab's adjusted non-GAAP earnings per share rose 42% to $1.62, with pre-tax profit margins expanding to 54.3%. However, daily trading volume has cooled slightly compared to the second quarter's record levels. Schwab currently trades at approximately 12 times next year's expected earnings, presenting a valuation significantly lower than Interactive Brokers' 27x multiple. Analysts view Schwab as a value play with steady growth prospects, though they caution that cooling trading activity could impact third-quarter results when the company reports in mid-October.