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Charles Schwab Posts a Mixed Q2

By Eric Volkman – Jul 17, 2020 at 3:52PM

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Although headline fundamentals were down, several important operational metrics rose during the quarter.

The stock of stock brokerage Charles Schwab (SCHW -1.02%) made the sell list for many investors on Friday, after posting a mixed quarter the day before. 

On Thursday, the company reported its Q2 of fiscal 2020 results. It booked net revenue of $2.4 billion, which was 9% down from the same quarter of 2019. Bottom-line, non-GAAP (adjusted) net profit saw a steeper fall -- it came in 21% lower, at $742 million ($0.54 per share).

Falling stock price indicated on an electronic graph

Image source: Getty Images.

On average, analysts tracking the storied finance sector company had estimated $2.47 billion for net revenue and a per-share adjusted net profit of $0.52.

In contrast to headline fundamentals, several operational metrics went in the opposite direction for Schwab. Its daily active trades (a key figure in the brokerage industry) more than doubled to 1.62 million, while it bolstered its number of accounts by 14% -- and this is in advance of the close of its blockbuster acquisition of peer TD Ameritrade.

"Throughout the second quarter, the COVID-19 pandemic and its effects continued to dominate the macroeconomic environment, presenting myriad challenges for our clients and Schwab alike," the company said of the results.

Yet it sounded a hopeful note for the future, writing, "there were some encouraging signs as the quarter progressed, including domestic equity markets recovering to pre-pandemic levels."

Schwab did not, however, proffer specific guidance for either the current quarter or year.

The company also touted several new products, including the fractional-share-buying service Schwab Stock Slices. This can be seen as an attempt to push into that rather new market segment most notably occupied by upstart brokerage Robinhood.

On Friday, Schwab was trading down by 3.6% in late afternoon action. By contrast, the broader stock market was up marginally.

Eric Volkman owns shares of TD Ameritrade. The Motley Fool recommends Charles Schwab. The Motley Fool has a disclosure policy.

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