PJC Piper Jaffray Companies

On Mar 8, 2013, we reiterated our long-term recommendation on The Charles Schwab Corporation (SCHW) at Neutral. This reflects the company’s fourth-quarter results, which were in line with the Zacks Consensus Estimate.

Why Neutral?

Schwab’s fourth-quarter earnings came in at 15 cents per share, at par with the Zacks Consensus Estimate. Growth in net interest revenue, lower provision for loan losses and balance sheet restructuring actions were the positives for the quarter. Yet, higher operating expenses as well as a fall in trading revenue dented the results.

Following fourth-quarter results, the Zacks Consensus Estimate for 2013 has gone up by a penny to 75 cents per share. The Zacks Consensus Estimate for 2014 has also advanced (up 3.6% to 87 cents per share). With the Zacks Consensus Estimates for both 2013 and 2014 increasing, the company now has a Zacks Rank #2 (Buy).

The key reason behind Schwab’s stable earnings is diversified revenue streams. Also, earnings continue to benefit from management’s aggressive efforts to increase clients in advisory solutions. Further, the company has been making efforts to become less dependent on interest rates.

However, low rates have been a drag on top line, forcing Schwab to waive fees, which it charges its clients for managing funds. Until the economic recovery gains momentum and interest rates increase significantly, the company will continue to experience a pressure on its revenue.

Other Major Investment Brokers Worth Considering

While we prefer Schwab, other stocks in the same industry that are worth a look include Evercore Partners Inc. (EVR), Piper Jaffray Companies (PJC) and SWS Group, Inc. (SWS). All these carry a Zacks Rank #1 (Strong Buy).
 

 
EVERCORE PARTNR (EVR): Free Stock Analysis Report
 
PIPER JAFFRAY (PJC): Free Stock Analysis Report
 
SCHWAB(CHAS) (SCHW): Free Stock Analysis Report
 
SWS GROUP INC (SWS): Free Stock Analysis Report
 
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