PaineWebber Group Inc. and Charles Schwab Corp. Thursday reported sharply higher third-quarter earnings, thanks to a burst of trading activity on Wall Street, where the stock market has chalked up stunning gains this year.
PaineWebber said its earnings for the quarter nearly quadrupled to a record $78.2 million, or 71 cents a share, from $20.3 million, or 27 cents a share, in the corresponding period a year ago. Sales jumped 47%, to $1.38 billion from $940 million.
The earnings report, which was stronger than Wall Street analysts had expected, sparked a jump in PaineWebber stock, which rose $1.75 to $21.375 on Thursday in New York Stock Exchange trading. Analysts had expected profits of 42 cents a share.
PaineWebber said the results, which included the operations of the Kidder, Peabody & Co. brokerage acquired last year, benefited from a jump in commission revenue to $333.7 million from $220.7 million in the 1994 quarter.
"Our third-quarter results show that a strategic acquisition combined with an outstanding PaineWebber team have resulted in a record-setting performance by the firm," Chairman Donald Marron said.
But analysts said they wonder whether PaineWebber can keep up the strong performance.
Perrin Long, analyst at Brown Bros. Harriman, said one issue he is concerned about is the leveraging of assets, which buoyed the latest results but could work against the company if the stock and bond markets retreat.
PaineWebber Chief Financial Officer Regina Dolan said, however, that the company's leverage is not out of line with the rest of the industry.
Discount brokerage Charles Schwab said its profit rose 51% to $47.2 million, also a record, from $31.2 million for last year's third quarter. Earnings per share rose to 26 cents from 18 cents. Sales advanced 55% to $385.5 million from $248.1 million.
The San Francisco-based firm said commissions and transaction revenue benefited from record trading volume in the third quarter.
The company's stock rose $1.375 to $25 on Thursday on the NYSE.
"The company achieved revenue growth of 55% and an after-tax profit margin of 12% for the third quarter," Chairman Charles Schwab said.
"In addition to a strong market environment, a key driver of these results was the $52.9-billion increase in customer assets since the third quarter of last year, raising customer assets to a record $169.6 billion."
The company said its customers' money market and cash balances rose 37% to a record $35.4 billion. Customer assets in Schwab's mutual funds rose 45% to a record $46.5 billion in the quarter.