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What’s Expected from Charles Schwab in 1Q18?

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Mar. 27 2018, Published 11:48 a.m. ET

Expected EPS

According to Wall Street analysts, Charles Schwab (SCHW) is expected to post EPS (earnings per share) of $0.53 in 1Q18, which reflects a substantial rise on a YoY (year-over-year) basis. The company is expected to benefit from its approach of working from the client’s perspective.

According to the company’s top management, it’s trying to attract investors’ attention by reducing its costs. Moreover, the company is making deployments in technology and infrastructure, which could lead to a rise in its expenses—but this would be a short-term effect.

On the other hand, Charles Schwab’s competitors (XLF) TD Ameritrade (AMTD), Interactive Brokers Group (IBKR), and E*TRADE Financial (ETFC) are expected to post EPS of $0.67, $0.53, and $0.75, respectively, in their March 2018 quarters.

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Expected revenue

Wall Street analysts expect Charles Schwab to generate revenue of $2.4 billion in 1Q18, which reflects a rise compared to the revenue it generated a year ago. This rise is expected to result from net interest revenue and asset management and administration fees.

In 2017, Charles Schwab saw positive momentum in its business. The company’s net revenue witnessed a rise of 15% YoY to $8.6 billion. However, compared to 2016, its net income rose 25% to $2.4 billion in 2017.

Charles Schwab is expected to witness upward momentum in its trading volumes in 1Q18 primarily due to volatility in the markets. The key drivers of this market volatility have been macroeconomic events such as interest rate expectations and the potential for a trade war.

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