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What Lies Ahead for Charles Schwab after the Strong Quarter

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May. 15 2018, Updated 7:34 a.m. ET

What’s behind the strong earnings season?

So far, the earnings season has been strong, with many companies beating analysts’ expectations. Could this momentum continue?

Brokerages (XLF) E*TRADE Financial (ETFC) and Interactive Brokers Group (IBKR) surpassed analysts’ EPS (earnings per share) and revenue estimates in 1Q18, while TD Ameritrade (AMTD) missed analysts’ EPS estimate but exceeded their revenue estimate.

Charles Schwab (SCHW) doesn’t expect 1Q18’s strong momentum to continue, suggesting that the strong earnings season was primarily due to corporate tax reform and higher energy prices helping the energy sector.

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What’s next?

In 1Q18, Charles Schwab reported total net revenue of $2.4 billion, with net interest revenue of $1.3 billion and trading revenue of $201 million. The company’s trading revenue largely depends on global economic factors, which affect equity markets.

After such a strong earnings season, market participants may be concerned about growth continuing. According to Charles Schwab management, growth rates may fall, and market participants shouldn’t expect tax reform to continue to benefit corporates.

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