Charles Schwab SCHW is slated to announce first-quarter 2025 results on April 17, before market open. The company’s quarterly earnings and revenues are expected to have grown on a year-over-year basis.

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Schwab’s fourth-quarter earnings beat the Zacks Consensus Estimate. Results benefited from the solid performance of the asset management business and higher net interest revenues. The absence of fee waivers, lower GAAP expenses and solid brokerage account numbers were the other positives.
 
The company has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and met in one, with the average beat being 4.07%.

Before we take a look at what our quantitative model predicts, let us check the factors that are likely to have impacted Schwab’s first-quarter performance.

Major Factors Likely to Impact Schwab’s Q1 Performance

Trading Revenues: Client activity was solid during the first quarter. The likelihood of a trade war amid President Donald Trump’s reciprocal tariffs, persisting inflation and higher-for-longer interest rates majorly drove client activity. In January and February, SCHW’s core net new assets surged substantially on a year-over-year basis. Also, the number of new brokerage accounts opened grew 17.8% and 5% in January and February, respectively.

Further, volatility was high in equity markets and other asset classes, including commodities, bonds and foreign exchange. Thus, Schwab is expected to have witnessed a decent rise in trading revenues in the to-be-reported quarter. The Zacks Consensus Estimate for trading revenues is pegged at $922.9 million, which suggests a 13% increase from the prior-year quarter. Our estimate for trading revenues is pegged at $851.2 million.

Net Interest Revenues (NIR): The consensus estimate for SCHW’s average interest-earning assets for the to-be-reported quarter is pegged at $424.6 billion, suggesting a decline of 1.6% year over year. This is in line with the company’s efforts to shrink its balance sheet. We expect the metric to be $431 billion.

Also, the Federal Reserve kept interest rates unchanged at 4.25%-4.5% during the quarter. This is likely to have supported SCHW’s net interest revenues, given relatively higher yields on interest-earning assets, partially offset by elevated funding costs. The Zacks Consensus Estimate for NIR is pegged at $2.62 billion, indicating year-over-year growth of 17.1%. Our estimate for the metric is the same as the consensus estimate.

Asset Management and Administration Fees: Led by decent equity market performance, SCHW is likely to have recorded a modest rise in asset management and administration fees. For January and February, Schwab’s client assets receiving ongoing advisory services grew 16% and 38%, respectively, from the prior-year months. The consensus estimate for asset management and administration fees of $1.53 billion implies a rise of 13.2%. We project the metric to rise to $1.56 billion.

Expenses: Schwab’s operating expenses have been elevated in the past few quarters. Due to persistent regulatory spending and strategic acquisitions, marketing and advertising, and efforts to enhance business efficiency, expenses are expected to have been high in the to-be-reported quarter.

We project total expenses of $3.11 billion for the quarter, up 5.9% from the prior-year quarter.

What the Zacks Model Unveils for Schwab

According to our quantitative model, the chances of Schwab beating the Zacks Consensus Estimate for earnings this time are high. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Schwab is +0.36%.

Zacks Rank: The company currently carries a Zacks Rank #3.

Q1 Earnings & Sales Estimates for SCHW

In the past seven days, the Zacks Consensus Estimate for first-quarter earnings has been revised 1% upward to 99 cents per share. The estimate indicates a jump of 33.8% from the year-ago quarter.

The consensus estimate for sales is pegged at $5.49 billion, which indicates a 15.8% rise.

Other Finance Stocks Worth a Look

Here are a couple of finance stocks that you may want to consider, as these also have the right combination of elements to post an earnings beat in their upcoming releases, per our model:

State Street Corp. STT is scheduled to release first-quarter 2025 results on April 17. The company has an Earnings ESP of +1.21% and a Zacks Rank of 3, at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Quarterly earnings estimates for STT have been revised marginally lower over the past week to $1.98.

The Earnings ESP for Truist Financial TFC is +0.15% and it carries a Zacks Rank of 3 at present. The company is slated to report first-quarter 2025 results on April 17.

Over the past seven days, the Zacks Consensus Estimate for TFC’s quarterly earnings has remained unchanged at 86 cents.

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State Street Corporation (STT) : Free Stock Analysis Report

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Truist Financial Corporation (TFC) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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